Event description:
On October 23, 2020, the company announced that in the first three quarters of 2020, the company achieved a total operating income of 1.275 billion yuan, an increase of 15.11% over the same period last year, and a net profit of 231 million yuan, an increase of 23.80% over the same period last year. Of this total, 2020Q3 achieved an operating income of 462 million yuan, an increase of 18.40% over the same period last year, a decrease of 10.44% from the previous year, and a net profit of 0.85 yuan from the previous year, an increase of 32.37% over the same period last year and a decrease of 8.06% from the previous year. The company's gross profit margin and net profit margin reached 33.22% and 18.15% respectively in the first three quarters of 2020, up 1.79% and 1.27% respectively over the same period last year.
Event comments:
Gross profit margin continues to rise, performance continues to grow
In the first three quarters of 2020, the company achieved a total operating income of 1.275 billion yuan, an increase of 15.11% over the same period last year, of which 2020Q3 achieved an operating income of 4.62 yuan, an increase of 18.40% over the same period last year, mainly due to the company's active response to the COVID-19 epidemic and the gradual expansion of new production capacity. At the same time, the gross profit margin of sales continued to increase, driving the growth of performance in the first three quarters of 2020. In terms of expense rate, the company management and R & D expense rate were 3.81% and 2.85% respectively, down 0.51% and 0.53% respectively from the same period last year, the sales expense rate increased by 0.01% to 5.42%, and the financial expense rate increased from-0.59% to 0.02%. Excellent cost control ability keeps profitability high.
The substantial expansion of the company's conveyor belt production capacity to replace road transport benefits highlights that the company currently has a conveyor belt production capacity of 6500 million square meters per year, which is expected to reach 9000 million square meters next year through new construction of 1500 million square meters and technical renovation of 1000 million square meters. The company's products are widely used in electric power, port, metallurgy, mineral and other industries to replace road transportation. With the stricter supervision of motor vehicle emissions, the replacement benefit of conveyor belt is prominent.
The company disclosed the preliminary plan for the public offering of convertible corporate bonds on September 26. The total amount of funds to be raised in this issue does not exceed 550 million yuan. After deducting the issuance expenses, it is proposed to be used for the wholly-owned subsidiary Tongxiang Desheng Belt Co., Ltd. to implement the annual output of 15 million square meters of high-strength energy-saving and environmental protection conveyor belt project. The construction period of the project is 15 months. after it is completed and put into production, it will further increase the market share of the company's conveyor belt industry, optimize the product structure through technological innovation, and enhance the company's comprehensive competitiveness.
The layout of the pension industry has progressed steadily, and the combination of medical care and nursing has made a breakthrough. Since 2012, the company has been involved in the pension industry, with the goal of creating a high-end pension service enterprise, promoting the company to expand with the light asset pension mode. At present, Tongxiang, the first nursing home invested by the company, has made a profit, and reached a medical technical cooperation agreement with the first people's Hospital of Tongxiang City, which has made a breakthrough in the mode of combination of medicine and care, which is expected to bring some contribution to the company in the future.
Investment rating and valuation: we believe that the company is the leader of the domestic conveyor belt industry, the capacity continues to expand and gradually reach production, optimistic about the company's long-term development. It is estimated that the annual net profit of return to home in 2020-21-22 will be RMB 360,000,000 respectively, corresponding to EPS 0.74, 0.88, 1.07 and PE 13.8, 11.5, 9.5 times, respectively, with a highly recommended rating.
Risk Tips:
Raw material price fluctuation risk; product demand is not as expected; project construction progress is not as expected.
