2019 and 1Q20 performance are basically in line with our expectations.
Yingfei Storage announced its 2019 results: its annual operating income was 701 million yuan, up 1.7% from the same period last year; its net profit was 78 million yuan, down 15.63% from the same period last year, corresponding to 0.26 yuan per share, slightly lower than expected. The reason why the profit was lower than expected was mainly due to the higher-than-expected loss of credit impairment (the provision for bad debts amounted to 9.259 million yuan from the increase in accounts receivable).
In terms of sub-business, the operating income of the warehousing robot system (system integration business) reached 365 million yuan, an increase of 5.05% over the same period last year, accounting for 52% of the operating income, and the gross profit margin was 33.9%, an increase of 0.2 ppt over the same period last year; the operating income of high-precision shelves was 323 million yuan, down 3% from the same period last year, accounting for 47% of the operating income and 31.2% of the gross profit margin, an increase of 0.6ppt over the same period last year.
The performance of 1Q20 is basically in line with expectations: 1Q20's operating income is 89.02 million yuan, down 35.55% from the same period last year; the net profit from home is 18.67 million yuan, up 29.74% from the same period last year; and the net profit from non-return is 9.14 million yuan, down 29.21% from the same period last year, which is in line with expectations. The decline in performance was mainly due to the fact that the epidemic affected the company's project acceptance in the first quarter and delayed the confirmation of revenue. Non-recurring gains and losses come from the fair value of the company's holdings in Nord Logistics to become gains and provision for bad debts to be reversed.
Trend of development
The controlling shareholder is changed to Jingdezhen Taowen Travel Group, focusing on the business synergy potential after the acquisition:
In March 2020, the company announced that the controlling shareholder and concerted actors had signed an intention agreement on share transfer with Jingdezhen Taowen Travel Group, and the transaction price was 50% higher than the closing price before the suspension.
Considering the financial strength of Tao Wen Travel Group and the local support for the intelligent manufacturing industry, we believe that Yingfei is expected to get order support. and help the company to realize the development from "warehousing equipment vendor" to "logistics system integrator + service provider".
The new capacity in Maanshan is built on schedule and is expected to be put into trial production in the third quarter of 2020: the Maanshan project has a total investment of 1 billion yuan, and we expect the project to increase production capacity by 100000 tons, which is expected to contribute 1 billion yuan in income and 130 million yuan in net profit. At present, the project is under construction on schedule, and we expect partial completion and trial production in the third quarter of 2020.
Profit forecast and valuation
Due to the impact of the epidemic on the completion pace of new production capacity, we reduced the net profit by 16.5% in 2021 to 88.37 million yuan / 115.43 million yuan. The current share price corresponds to a price-to-earnings ratio of 30x / 23x in 2021. Maintain a neutral rating, but due to the earnings reduction, we lowered our target price by 13.0% to 10.00 yuan, corresponding to 34.3 times 2020 price-to-earnings ratio and 26.3 times 2021 price-to-earnings ratio, which has 13.4% upside space compared with the current stock price.
Risk.
The epidemic lasted longer than expected and steel prices fluctuated sharply.