Event: the company announced on April 28 that its 2019 revenue was 2.972 billion yuan (+ 12.97%), its net profit was 306 million yuan (+ 17.52%), its gross profit margin was 24.20% (+ 0.44pcts), and its net profit rate was 11.35% (+ 0.52pcts).
Affected by the epidemic, Q1's revenue in 2020 was 493 million yuan (- 17.87%), and the net profit returned to its mother was 40.8308 million yuan (- 27.29%).
Main points of investment:
The company's profits grew steadily, and cost reduction and efficiency continued to advance: the company's revenue in 2019 increased by 12.97% compared with the same period last year, and its net profit increased by 17.52% compared with the same period last year. The performance in the fourth quarter was outstanding, with revenue of 1.02 billion yuan (+ 53.56%) and net profit of 88 million yuan (+ 42.66%). At the end of the year, the total assets were 4.249 billion yuan (+ 23.49%), and projects under construction increased by 222.54% compared with the same period last year. The reason for the large increase was due to the construction of the company's smart factory projects related to new energy vehicles. Inventory increased by 17.63% year-on-year, with a price decrease of 10.4896 million yuan. The advance increased by 48.17% compared with the same period last year, due to the increase in the advance of materials paid by Tianyu Changying. The company's gross profit increased 0.44pcts compared with last year, but declined significantly from its 2016 high, mainly due to the sharp rise in the price of raw materials such as silicon steel and copper, which accounted for a high proportion of costs.
The pledge of 104005200 shares (26.00% of the total shares and 100% of its shares) pledged by Tibet Beihang Changying Tiangqi shares will expire on April 23, 2020, but has not yet been implemented due to the impact of the COVID-19 epidemic.
Changying apocalypse has submitted an application for extension, which shall be carried out in accordance with the final documents obtained by Changying apocalypse and the registration of pledge extension. Long Eagle apocalypse has consulted with CITIC, the actual financier, and the other side will give long Eagle apocalypse sufficient time to return some or all of the pledged money.
The company's "UAV + motor" dual main industry goes hand in hand, with steady growth in scale and performance: the company is mainly engaged in motor parts and UAV modules, accounting for 76.90% of revenue and 14.31% of UAV revenue.
① drone business: in 2017, the company acquired Beihang UAV industry Tianyu Changying through assets, bringing drones into the main business. Tianyu Changying military UAV is mainly used in medium-and long-range reconnaissance missions, while Tianyu series is mainly used in civil use, which can be used in medium-and high-altitude survey, electric power line patrol, environmental monitoring, disaster prevention and plant protection.
In 2019, the company's drone business developed smoothly, signed large orders, and the scale grew steadily. The revenue of the newly added branch UAV system is 359 million yuan, with a gross profit margin of 27.93%; the revenue of UAV technical service fees is 66.5505 million yuan, down 51.96% from the same period last year, and the gross profit margin is 75.96%. The decline in revenue from technical service fees is due to the addition of a new statistical division of the UAV system, which we believe is related to the adjustment of the settlement method. In 2019, the subsidiary Tianyu Changying realized revenue of 425 million yuan (+ 205.76%) and net profit of 71.3722 million yuan (+ 2.96%).
② motor business: the company is located in the middle and high end specialized motor parts manufacturing field, the main products are automobile generator and electric bicycle stator and assembly, elevator traction machine stator, micro and home appliance motor rotor, etc., can be used in automobile, elevator, refrigerator and electric bicycle and other industries.
Affected by the early implementation of the sixth national emission standards and the retrogression of new energy subsidies in 2019, the volume of automotive motor business decreased, with revenue of 1.226 billion yuan (- 6.82%) and gross profit margin of 18.30%; electric vehicle business revenue of 625 million yuan (+ 15.02%), gross profit margin of 9.11%; revenue of ice press business of 273 million yuan (+ 7.93%), gross profit margin of 10.99% The revenue of other motor business is 161 million yuan (+ 10.37%), with a gross profit margin of 12.05%, which includes a large increase in elevator business due to the iterative acceleration of elevators in the old community.
Double main business customer base is stable, make full use of location advantages to achieve industrialization layout: the company's double main business has the characteristics of stable customer base: motor parts need third-party and second-party certification, motor machine factory generally does not easily change suppliers. The company has established long-term cooperative relations with many large motor and electrical manufacturers at home and abroad, such as Valeo, Bosch, Denso and so on. In terms of drones, Tianyu Changying, a subsidiary of the company, is a designated domestic UAV development unit, and its products have been installed in the navy, air force and strategic support units for more than ten years. The company sells directly to military customers and military trading companies, and has established a close cooperative relationship with relevant departments of national defense and military industry. At the same time, the company's Tianying BZK-005E UAV has been established for military export in 2018, and its customer base is expected to be further expanded.
At the same time, the company makes full use of location advantages to achieve specialized division of labor and improve production efficiency. In terms of motor, Taizhou City, Zhejiang Province is one of the areas where motor and its supporting industries are more concentrated, and the distribution of upstream and downstream industries is more intensive. In terms of drones, the company is actively promoting the industrial layout. In January 2020, Tianyu Changying signed a cooperation agreement on investment in Beihang's UAV project with the Management Committee of Taizhou Bay Circular economy Industrial agglomeration Zone. The company will build a large-scale UAV production base and UAV testing and appraisal center in Taizhou Bay agglomeration area, and receive a total of 70 million yuan in government subsidies. Relying on the two business centers in Beijing and Taizhou, the company will continue to consolidate the stable supply of existing models and at the same time continue to increase investment in scientific research.
The success of the gradual transformation from a traditional motor parts manufacturer to a science and technology enterprise: the company's transformation to a science and technology enterprise is mainly reflected in two aspects: the industry expansion of motor business and the introduction of UAV business. In terms of motor, the company already has the high-tech and professional advantages of all kinds of motor parts, maintaining the traditional industry in the general environment and continuing to explore emerging markets at the same time. The automobile aspect includes the high-speed growth of new energy vehicles and the middle and high-end model market based on dual-motor configuration; the rapid growth of ice pressure frequency conversion products in household appliances; the demand for the replacement of old elevators is increasing year by year; the intelligence and efficient performance of electric bicycles. It is worth mentioning that the flat-line motor has become the development trend of new energy vehicles, and the company's related smart factories are expected to contribute new performance increments during the construction. In terms of drones, the company introduces drones to meet the new highlights and growth points of China's economic innovation and development, and expands foreign trade and civilian use on the basis of military products. In the civil field, the company has cooperated with BABA Cainiao in the "hump" unmanned logistics plan, and foreign countries have won 150th orders from Indonesia Eagle Airlines; in terms of market development, the company signed an order contract for drone systems and services worth 925 million yuan with a customer in December 2019, accounting for 35.16% of the recently audited fiscal year's operating income.
With the vigorous development of the drone industry and the continuous development of civil-military integration, the company will continue to promote the acquisition of minority stake in Tianyu Changying. Through the synergy of "Beihang" technology platform and company capital platform, we will further increase various innovations in the field of UAV.
COVID-19 's epidemic brought uncertainty to the company's motor and foreign trade business: affected by the epidemic, the company's Q1 revenue fell by 17.87% in 2020, and its net profit fell by 27.29%. Due to the epidemic restrictions on travel, the global automobile consumer market has been hit off a cliff, and the company's motor business will be affected to a certain extent. However, we believe that there will be a rebound after the elimination of the epidemic, and the related effects tend to be short-term. At the same time, with the continuous fermentation of the overseas epidemic, the company's foreign trade business will also be affected. According to previous annual data, the company's foreign trade revenue accounts for about 15% of revenue (13.96% in 2019), which is expected to be highly uncertain.
Investment suggestion: in recent years, the company has gradually made a successful transformation from a traditional motor parts manufacturer to a science and technology enterprise, with the dual main business of "UAV + motor" going hand in hand, stable customer base, active use of location advantages, and steady growth in scale and performance. The UAV business plays a synergistic role through the "Beihang" technology platform and the company's capital platform, and there is more room for profit growth in the future; the motor business focuses on the development trend of emerging industry segments such as new energy vehicles and the transformation of old elevators, and performance is expected to continue to be driven by demand.
We predict that the net profit of the company in 2020, 2021 and 2022 will be 353 million yuan, 423 million yuan and 510 million yuan respectively, and the EPS will be 0.88,1.06,1.28 yuan, respectively. Considering the development potential of the company to enter the drone market, the company will be given a "buy" rating of 20 times PE in 2020 with a target price of 17.60 yuan.
Risk hint: COVID-19 epidemic caused a decline in motor and foreign trade business, drone market development did not meet expectations, raw material prices rose.