Event
The company announced its 2020 results, KuaiBao, with an income of 4.28 billion yuan in 2020, an increase of 17% over the same period last year; a total profit of 580 million yuan, an increase of 93% over the same period last year; a net profit of 490 million yuan, an increase of 93% over the same period last year; and a net profit of 450 million yuan, an increase of 84% over the same period last year.
Main points of investment
The performance exceeded expectations; the full-year income reached an all-time high; the operating net cash flow steadily increased by 1.2 billion yuan in the fourth quarter of 2020, up 30% from the same period last year, which was 27% higher than the growth rate in the third quarter; the net profit was 120 million yuan, up 134% from the same period last year, and 103% higher than the growth rate in the third quarter; the net profit was deducted from 100 million yuan, up 28% from the same period last year. The company achieved revenue of 4.28 billion yuan in 2020, an increase of 17% over the same period last year, a record high, and its net profit reached 490 million yuan, an increase of 93% over the same period last year, exceeding our previous profit forecast. The company's operating net cash flow has increased steadily, and its profitability has continued to improve throughout the year, with a ROE of 16%. The company's orders continue to grow, reduce costs and increase efficiency to improve profitability.
The scale effect increases, the supply chain optimizes and controls the material cost, and the profitability is expected to continue to increase the company's elevator sales of nearly 30,000 units in 2019, with a domestic market share of about 3%. By mastering the core control cabinet technology, 60% of the core components are manufactured independently, and the cost advantage is obvious. Through the continuous expansion of downstream major customers, the domestic market share is expected to increase to more than 5% in 2025. As of the first half of 2020, the company's valid orders were about 7 billion yuan, an increase of more than 10% compared with the end of 2019. With the continuous increase in the number of orders, the enterprise scale effect is prominent.
The company has strengthened the group procurement and supply chain optimization, better control the annual material cost. The company's net interest rate was only 7% in 2019, rising sharply to 12% in 2020, and is expected to rise further in 2025.
Downstream demand continues, and the total scale of the domestic elevator market is expected to reach an annual compound growth rate of 11% in the next five years. With the strengthening of infrastructure construction such as real estate, rail transit and old reform, the demand for domestic escalator equipment will continue to expand, and the later market will gradually enter a period of rapid development. The total size of the domestic elevator market is 177.5 billion yuan in 2019 and is expected to reach 223.6 billion yuan in 2021, with a compound growth rate of 11% in the next five years. In 2019, the domestic sales volume of the whole ladder is 900000, with a market size of 135 billion. The new construction of downstream real estate and the replacement of the stock market will support the sustained and steady growth of the elevator industry, and the overall elevator sales are expected to grow at an average annual compound rate of 9% from 2020 to 2025. Sales of the whole ladder in 2021 are expected to exceed 1.1 million units, of which 950000 units will be added by the completion of real estate and 10, 000 units by rail transit.
Profit forecast and valuation
The prosperity of the elevator industry is expected to continue in 2021, and the company's market share and profitability are expected to further improve. It is estimated that the company's net profit from 2020 to 2022 will be 4.9pm 590,690 million, an increase of 93 per cent over the same period last year, with an increase of 93 per cent, 21 per cent and 17 per cent, respectively, with a corresponding EPS of 0.61 won 0.74 per cent and a pre-PE multiple of 16-14-12, maintaining the "Buy" rating.
Risk hint
Investment in real estate infrastructure is lower than expected; steel prices have risen sharply; elevator safety accidents; industry competition has deteriorated.