Event
According to the annual report, the company achieved operating income of 1.066 billion in 2019, + 14.84% year-on-year, 140 million net profit, + 73.99%, 129 million non-return net profit, + 68.55% year-on-year net profit. It is proposed to pay a cash dividend of 0.80 yuan for every 10 shares.
Brief comment
The performance of Q4 is bright, and the market share of wind power glue business is accelerated. Q4 achieved revenue of 388 million yuan in a single quarter, + 66.74% year-on-year and + 56.40% month-on-month, with a net profit of 49.79 million yuan, + 146.81% and + 58.06%, respectively. The company's revenue from epoxy resin adhesive for wind power is 486 million yuan, which is + 65.21% compared with the same period last year, which is much higher than the growth rate of newly installed wind power. The company's domestic market share is about 60%, and its leading position is prominent. With the rush installation of onshore wind power this year and offshore wind power next year, coupled with the expansion of overseas markets (Gamesa has entered the stage of small batch trial production), the wind power glue business can continue to develop.
The decline in raw material costs has increased the performance elasticity and the cash flow has improved significantly. The price of raw materials fell in 2019, with a comprehensive gross profit margin of 37.57%, year-on-year + 8.74pct, while the company increased market expansion and R & D investment, and the expense rate increased. The annual net profit rate was 13%, year-on-year + 4.41pct. It is expected that raw material prices will remain stable in the future, which is conducive to the release of performance. In 19 years, the net cash flow of operating activities was 189 million, compared with-81.25 million yuan in the same period last year, a substantial improvement.
The subsidiary must control technology engaged in electromagnetic compatibility business, achieved non-return net profit of 38.42 million yuan in 19 years, lower than 4600 of the performance commitment, lower than expected, mainly due to the postponement of some projects, the extension of military inspection time and other factors, the performance of about 40 million of the contract during the gambling period was extended to the next year, but did not touch the impairment of goodwill in 2019. In the future, must control will increase investment, the size of the domestic electromagnetic compatibility industry is about 5 billion, and there is still more room for import substitution.
In December 2019, the company launched a step-by-step acquisition of Jing Hanyu (divided into two years). Jing Hanyu is engaged in the testing business of military electronic components. In February 2020, 70 million of the company acquired a stake of 8.51%. The first small step was completed, and subsequent acquisitions will gradually thicken the company's performance.
Jing Hanyu's performance volume is about 100 million, which will greatly increase Kangda's market capitalization space after it is fully incorporated into the listed company.
Profit forecast: the net profit from 2020 to 2022 is expected to be 1.43,2.01 and 280 million yuan respectively, maintaining the "buy" rating. Assuming that Jing Hanyu will completely merge the table next year, regardless of the time of the table, the performance of the 2021 exam will be about 250 million yuan, with a target market value of 6.6 billion yuan.
Risk hints: Jing Hanyu's acquisition progress is not as expected, raw material price fluctuations, goodwill impairment risk, etc.