2019 performance is in line with market expectations
Dinghan Technology announced its 2019 results: the company's operating income in 2019 was 1.6 billion yuan, an increase of 17.9% over the same period last year; its mother's net profit was 42.68 million yuan, turning losses into profits, slightly higher than that of KuaiBao before. 4Q19's revenue was 550 million yuan, an increase of 21.9% over the same period last year, and its mother's net profit was 8.4 million yuan, turning losses into profits. The company's overall performance is in line with market expectations.
The income of rail transit equipment has increased, and the comprehensive gross profit margin has rebounded. In 2019, the company's vehicle / ground / information and safety inspection revenue reached 813,449 million yuan, an increase of 31.6% / 17.2% / 5.2% respectively over the same period last year. The company's comprehensive gross profit margin increased by 1.76ppt to 31.4% compared with the same period last year; among them, the gross profit margin of vehicle / information technology and security inspection increased by 2.9/5.6ppt to 24.0% and 43.1% respectively, and the gross profit margin of the ground business was basically the same.
During the period, the expense rate decreased and cash inflows improved. The company's overall expense rate fell by 2.3ppt to 30.7% year-on-year in 2019. Among them, the sales / management / R & D expense rate decreased by 1.5/1.3/0.3ppt, while the financial expense rate increased by 0.7ppt compared with the same period last year. Due to the large impairment of goodwill in 2018, it turned losses into profits in 2019, with a net profit margin of about 2.7%. In addition, the company's operating cash inflow in 2019 was 110 million yuan, an increase of 40 million yuan compared with the same period last year.
Trend of development
The epidemic put pressure on short-term performance. By the end of 2019, the company's on-hand orders were 2.05 billion yuan, down 7.0% from the same period last year. In addition, due to the delay in project progress and the increase in financing costs caused by the epidemic, the company forecasts a net profit loss of 3200-37 million yuan in the first quarter of 2020, compared with a profit of 7.44 million yuan in the same period last year.
The reform within the company has been deepened. (1) in 2019, the company changed its name to "Beijing Dinghan Technology Group", and all its subsidiaries used the name "Dinghan" to establish a unified brand image. (2) in early 2019, Dinghan Technology formally introduced the strategic shareholder "Guangzhou Rail Transit Fund" (holding 9%), which is backed by Guangzhou Metro Group, and we believe that it is expected to help the company's market development and product research and development. for example, at the beginning of 2019, the company signed a strategic agreement with Guangzhou Metro and Guangzhou Rail Transit Fund to jointly promote the R & D and industrial application of medium frequency / high frequency auxiliary power technology.
Profit forecast and valuation
Taking into account the short-term impact of the epidemic and the decline in order growth, we lowered the 2020 profit forecast by 60% to 0.09 yuan per share, and introduced the 2021 net profit forecast of 0.15 yuan per share. The current share price of the company corresponds to 66amp, 39x, 2020max, 2021e Phand E. Taking into account the profit pre-adjustment and the increase in the valuation of the rail transit industry, we maintain the company's target of 5.88 yuan, corresponding to 2020/21e65/38 times Pamp E, which is 2% lower than the current stock price and maintains a neutral rating.
Risk.
The growth rate of new orders is not as fast as expected.