Event: on the evening of August 27, the company released its semi-annual report for 2020. According to the semi-annual report, the company's operating income during the reporting period was 402 million yuan, down 10.11 percent from the same period last year; the net profit belonging to shareholders of listed companies was 11.377 million yuan, down 54.64 percent from the same period last year; and the net operating cash flow was 28.4779 million yuan, an increase of 689.86 percent over the same period last year.
Comments:
The company was hit by the epidemic in the first half of the year and turned a profit in the second quarter. Affected by COVID-19 's epidemic situation in the first half of 2020, the company's small household appliance business declined significantly in the first quarter due to factors such as delayed resumption of work and flagging overseas demand. 2020Q1 revenue fell 33.69% year-on-year, net profit dropped 137.8%, non-return net profit decreased 211.21% year-on-year, revenue of 2020Q2 increased by 8.62%, net profit increased by 99.18%, and non-home net profit decreased by 50.86%. Revenue improved compared with the same period last year, profits improved month-on-month, and the financial side showed that the company's business was gradually on the right track. The main reason for the revenue growth in the second quarter is that the company's engineering subsidiary, Guohai Construction, achieved 59.734 million yuan in revenue during the reporting period, which effectively contributed to the company's performance in the first half of the year. In addition, the main small household appliances business has achieved smooth channels in the domestic normalization and epidemic prevention stage, which is complementary with the company's overseas channels.
At the end of the first half of the year, the company's net operating cash flow increased by 689.86% compared with the same period last year, and accounts receivable decreased by 24.28% compared with the beginning of the year, which shows that the company has strengthened the sales repayment of the business and effectively improved the company's anti-risk ability.
Tamp the core business of small household appliances and grasp the product channels. The company has signed cooperation agreements with Aisi and Douhe Electronics to carry out strategic cooperation in air purifier and mosquito lamp projects to enrich the company's product line and open up the market for environmental health appliances. The company's active attempt in overseas e-commerce channels is conducive to speeding up the pace of epitaxial development. In addition, the signing of a strategic cooperation agreement with Gome helps to enhance the market awareness of the company's brand, increase the market share and share of the company's small household appliances, and broaden the domestic market and sales channels. In terms of offline channels, Jinwright's provincial agents have been rolled out in an all-round way, covering all provinces, municipalities, and autonomous regions except the Tibet Autonomous region, and have entered the commercial super channel represented by Walmart Inc.
The two-wheel drive strategy of "small household appliances + engineering construction" has enhanced the company's anti-risk ability. The engineering construction business of Guohai Construction, a wholly owned subsidiary of the company, achieved an operating income of 59.734 million yuan in the first half of 2020, with a total contract amount of 865 million yuan. in addition, Guohai Construction will use its own resources to gradually increase the business layout in the field of municipal public works and actively undertake highway, water conservancy, environmental protection and other municipal projects.
Investment advice: neutral rating. COVID-19 's epidemic situation has had a great impact on the company's channels at home and abroad, and the company's revenue increased year-on-year in the second quarter of 2020, which is conducive to the transformation and development of the company through the implementation of the two-wheel drive strategy of "small household appliances + engineering construction". It is estimated that the EPS of the company from 2020 to 2021 is 0.24yuan and 0.25yuan respectively, and the corresponding PE is 48 times and 46 times respectively. Cover for the first time and give a neutral rating.
Risk hint. The market competition intensified, the interpretation of the epidemic exceeded expectations, and the market sales of new products fell short of expectations.