In 2019, the company achieved revenue of 6.122 billion yuan, an increase of 12.06% over the same period last year; net profit of 427 million yuan, an increase of 218.2% over the same period last year; and the company's comprehensive gross profit margin of 13.84%, a year-on-year decrease of 0.79pct, and a net interest rate of 6.99%, an increase of 4.47pct over the same period last year. The sharp increase in net profit is mainly due to an increase of 116 million yuan in investment income over the same period of 18 years and the low base effect of 18 years due to large provision for impairment. 20Q1 realized operating income of 1.095 billion yuan, down 4.21% from the same period last year, and its net profit was 40.1293 million yuan, down 68.72% from the same period last year. With the arrival of the elevator renewal cycle and the installation of new ladders in the old house, the 20-year Guangri net profit is expected to be 498 million, corresponding to 13 times PE, which is strongly recommended.

Sub-business point of view: (1) Elevator business: in 19 years, the operating income was 1.578 billion yuan, an increase of 0.64% over the same period last year, with little change. Elevator sales were 16000, up 3.72% from the same period last year, but due to the regulation and control of the real estate market, the installation progress of elevator projects slowed down, and inventory increased by 48.92% compared with the same period last year. In order to adapt to the changes in the macroeconomic environment, the production cost of the whole machine moved forward, and the company strengthened its cost management. The gross profit margin of elevators reached 19.17% in 19 years, an increase of 3.52pct over the previous year. (2) Elevator parts business: realized business income of 2.816 billion yuan, an increase of 15.81% over the same period last year, and a gross profit margin of 9.9%, a decrease of 1.5pct over the same period last year, mainly due to increased pressure on spare parts production and supporting logistics packaging costs. (3) installation and maintenance, logistics warehousing and packaging: the revenue was 378 million yuan (+ 13.33%), 597 million yuan (+ 23.85%) and 441 million yuan (+ 23.78%) respectively, and the gross profit margin decreased, mainly due to the increase in labor costs and raw material costs.

20Q1 realized operating income of 1.095 billion yuan, down 4.21% from the same period last year, and its net profit was 40.1293 million yuan, down 68.72% from the same period last year, 12.13% from the same period last year, slightly lower than the same period last year, and the net profit rate was 3.5%, a large decline. Q1 revenue and net profit decline is a normal phenomenon in the industry: a large number of Q1 real estate and infrastructure projects shut down, the elevator industry is generally affected. The decline in revenue is mainly due to personnel assembly and logistics pressure, and it is understood that the industry has returned to the normal pace of production and delivery in mid-March.

The arrival of the renewal cycle + the improvement of completion + the establishment of the direction of the old reform is the main logic of recommending the elevator industry. On the one hand, affected by the epidemic, the area completed in the first two months of 2020 was negative compared with the same period last year, but the area completed in March has turned negative to positive year on year, which is expected to continue the trend of positive growth after September 19. On the other hand, the direction of the old reform has been established, which is not only to effectively expand domestic demand, but also to improve people's livelihood projects, and it will also be one of the main themes of investment in 2020. Elevators are one of the main beneficiary industries and are expected to open the growth ceiling and start a new business cycle.

Maintain a highly recommended rating. The company's business includes elevator manufacturing, sales and engineering services, elevator parts manufacturing and logistics services, covering the entire elevator industry chain, while holding shares in Hitachi elevator high-quality assets, currently taking elevators as the core products. continue to extend to the upstream and downstream industrial chain. With the arrival of the elevator renewal cycle and the installation of new ladders in the old house, the 20-year Guangri net profit is expected to continue to grow, with an estimated net profit of 490 million, corresponding to 13 times of PE, which is strongly recommended.

Risk tips: prices are falling too fast, real estate investment growth is falling faster than expected, and raw material prices are fluctuating.