Event: the company recently released its semi-annual report for 2020. 2020H1 achieved an annual operating income of 1.765 billion yuan, an increase of 3.6% over the same period last year, and a net profit of 167 million yuan belonging to listed companies, an increase of 62.38% over the same period last year. The net cash flow generated by the company's operating activities rose sharply by 224.1% to more than 200 million yuan. The company's Q2 reached 1.244 billion yuan in 2020, an increase of 29.5% over the same period last year, and its net profit reached 162 million yuan, an increase of 119% over the same period last year.
The company expects to make a profit of 3.2 billion to 400 million from January to September, an increase of 60% over the same period last year.
Semi-annual pre-distribution plan: cash dividend of 1.5 yuan (including tax) is distributed for every 10 shares.
Comments:
Q2 performance explosive growth, profitability continues to improve.
The company has built an integrated independent research and development system from parts to the whole machine, supported by independent research and development, complete product and service solutions, vertical elevators cover 17 product series and 69 specifications, escalators and automatic sidewalks cover 17 product lines and 40 specifications. Since Q2 in 2020, the brand effect of the company has become increasingly prominent, the number of orders on hand has increased, and the sales price has remained stable. At the same time, at the beginning of the year, the company locked in the price of raw materials such as steel, reduced costs, increased gross profit margin, and achieved remarkable results in fine management. During the period, the expense rate decreased by 1.2% compared with the same period last year, and the company's profits increased.
The company's profitability continued to improve in 2020. The gross profit margin of Q1-Q4 in 2018, 2019, and Q1-Q2 in 2020 was 26.03%, 26.94%, 30.31%, 30.61%, 30.87%, 27.64% (epidemic impact), 32.71%, and the net profit margin was 0.48%, 3.91%, 7.65%, 9.63%, 9.27%, 1.13% (epidemic impact), 12.65%.
Orders on hand are still abundant: as of June 30, 2020, the valid order being executed by the company was 6.343 billion yuan (excluding the Beijing new airport section of the inter-city railway Lianluo line, which did not receive a deposit, etc., with a total of 622 million yuan), an increase of 11.77% over the same period last year, which continued to increase compared with the end of 2020Q1. On-hand orders are an important basis for the realization of future revenue and profits in the elevator industry. with the improvement of the base, it is expected that the scale effect of the company will be further highlighted in the later stage.
The reform of marketing project management continues to deepen, and option incentives are completed to ensure development:
Management reform is the focus of the company in recent years. In 2017, the company comprehensively carried out business reform, the manufacturing type changed to the manufacturing service type, and the speed type changed to the quality and benefit type. The reform of domestic marketing and engineering system management has achieved remarkable results in 2019. On this basis, it continues to deepen in the first half of 2020, and the improvement of business quality reflects the results of the reform.
The company will complete the option incentive in July 2020, which is expected to further stabilize and motivate the core team and provide a mechanism for the company's long-term development. The company continues to promote digital transformation, promote and optimize the deep integration of information technology with customer delivery process as the main line, and invest in a number of information projects, including standard order integrated execution platform. In the future, on the basis of information-based data warehouse, the company can more accurately delegate power, further change the traditional management model, improve decision-making efficiency and stimulate business vitality.
Open up new markets for elevators such as rail transportation and installation.
1. Focus on the development of rail transit industry. Under the opportunity of the rapid development of China's high-speed rail and rail transit market, seize the peak of key construction, actively participate in market bidding, and improve the ability to obtain orders for rail transit projects. As of July 22, 2020, the company won a total of 600.8431 million yuan in the high-speed rail and rail transit market in 2020, accounting for 118.28% of the company's total winning bid in 2019. The market competitiveness and market recognition of the company's heavy-duty escalator products are strengthened day by day. With the expansion of the company's business scale, the company is still actively planning the long-term development of maintenance and transformation, maintenance and maintenance business plate, and vigorously open up the paid service market.
2. Aiming at the people's livelihood project of installing elevators in old buildings, Happiness plus ladder faces the market with the dual business mode of single-ladder sales and integration project, develops the agent system, and under the background of deepening the management reform of the headquarters through independent projects and cooperative development projects, the company will follow up to strengthen the layout and operation of Happiness plus ladders in the business field in the direction of national deployment to speed up the transformation of old urban residential areas.
Dividends highlight long-term investment value.
The company ended the period of large-scale capital construction and fixed assets investment at the end of 2017. Since the mid-report in 2018, the cumulative dividend has reached 5 times, with a total amount of 1.33 billion yuan (including tax). The company has no interest-bearing liabilities for a long time, has plenty of cash, and the potential of long-term dividends is worthy of attention.
Profitability forecasting and valuation. We expect the industry to maintain a relatively stable growth trend, the company as a domestic elevator leader, is expected to continue to grow, we expect the company to belong to the parent company shareholder net profit of 410 million, 530 million respectively, the current stock price corresponding to PE 21, 16 times, maintain the overweight rating.
Risk tips: increased competition, falling prices; slow completion; rising prices of raw materials.
Indicators / year 2018A 2019A 2020E 2021E