Event

CUHK publishes its annual report in 2019 and quarterly report in 2020

According to the 2019 annual report released by Zhongda, the company achieved an operating income of 358.506 billion yuan in 2019, an increase of 19.45% over the same period last year, and a net profit of 2.734 billion yuan, an increase of 14.04% over the same period last year. During the reporting period, the company achieved earnings per share of 0.54 yuan, with a weighted average ROE of 12.44%, an increase of 0.38% over the same period last year.

In addition, the company achieved operating income of 69.29 billion yuan in the first quarter of 2020, down 4.19% from the same period last year, and realized a net profit of 610 million yuan, a decrease of 32.72% over the same period last year.

Brief comment

Rapid growth of revenue from supply chain integration services

As the leader of supply chain integration services in the Yangtze River Delta region, the company's business scale continued to expand during the reporting period. in 2019, the company's revenue from supply chain integration services reached 342.268 billion yuan, an increase of 18.11% over the same period last year, with a gross profit margin of 1.79%, down 0.17% from the same period last year. In terms of varieties, metal materials, chemicals, coal, complete vehicles and post-service in supply chain integration services increased by 37.3%, 6.59%,-0.62% and 13.23% respectively compared with the same period last year. The company has rich experience in the supply chain of commodities such as metal materials and has an absolute competitive advantage, and we believe that the scale of its supply chain integrated services business is expected to further grow in the future.

The advantage of the financing side is obvious, and the financial cost is decreasing continuously.

From the expense side, the company's financial expenses for 2019 were 897 million yuan, down 28.18% from the same period last year, which also boosted the annual performance to a certain extent. The decline in the company's financial expenses is mainly due to its meticulous management of the debt side. On the one hand, by seizing the favorable opportunity of low interest rates, the company takes the initiative to increase the proportion of bond issuance; on the other hand, it not only strengthens its liquidity management ability through rediscount, interbank lending, electronic bill acceptance and other operations, but also further reduces financing costs. In 2019, the company issued a total of 12.8 billion yuan in various kinds of bonds, and the comprehensive financing cost decreased by 1.36% compared with 2018.

With the increase of industry concentration, the company's market share is expected to expand gradually in the future. due to the large demand for funds in the supply chain integration service industry, the financing cost and financing capacity of enterprises are the key factors that determine their profitability. As the leader of supply chain integration service in the Yangtze River Delta, the company is controlled by Zhejiang SASAC, which has stronger ability than other smaller supply chain enterprises in terms of financing cost and financing ability. In the case of continuous fluctuations in interest rates, the survival pressure of smaller supply chain companies will further increase, thus promoting the gradual increase of the company's market share.

Maintain the company's overweight rating

We believe that the company will continue to rely on its "circulation 4.0" concept to further expand the upstream and downstream networks. And as the leader of supply chain integration service in the Yangtze River Delta, the company has more obvious advantages in the financing end, and its business scale is expected to increase gradually in the future. We estimate that the income level of the company from 2020 to 2022 will reach 377.388 billion yuan, 421.609 billion yuan and 471.5 billion yuan respectively, and the net profit belonging to the owner of the parent company will be 3.116 billion yuan, 3.622 billion yuan and 3.803 billion yuan respectively, corresponding to 0.62 yuan, 0.72 yuan and 0.75 yuan for EPS.

Risk hint: the company's financing costs rise; the epidemic leads to a further decline in downstream customer demand.