The company has a 20-year income of HK $2.925 billion and an adjusted net profit of HK $313 million.
According to the company's annual report, the 20-year income was 2.925 billion Hong Kong dollars, down 19.7 percent from the same period last year; the 20-year return net profit was-148 million Hong Kong dollars, and the loss was mainly due to the company's impairment of goodwill and other assets (deducting taxes) of 440 million Hong Kong dollars. After the provision, the book goodwill value is 0. After adding in factors such as impairment of goodwill, the company's 20-year adjusted return net profit was HK $313 million, down 46 per cent from a year earlier.
20H2 revenue margin improved, gross profit margin continued to be under pressure. In the past 20 years, the business income of investment castings, precision machine parts, sand castings and surface treatment decreased by 22%, 17%, 23% and 7% respectively. 20H2's overall revenue growth rate was-10% year-on-year, narrowing the decline and 14% month-on-month growth rate, showing a marginal improvement. Among the business segments, precision machining business, commercial vehicle business and China business improved greatly, with 20H2 revenue growing at 37%, 60% and 27%, respectively.
The gross profit margin of 20H2 is 26%, down 5% from the same period last year, but it has not improved due to factors such as product structure and exchange rate. In the past 20 years, the company has completed 1371 new development part numbers, an increase of 38% over 19 years, laying a good foundation for business growth.
In the downstream industry, the recovery of automobiles and construction machinery is relatively clear, and the aviation industry remains to be seen. In the past 20 years, cars accounted for 48% of the company's revenue, industrial and other accounted for 43%, aviation and medical accounted for 9%. The recovery in the automotive and construction machinery industries is relatively clear. 20M12, combined car sales (production or registration) in China, the US, Europe and Japan rose 2 per cent year-on-year, according to Wind, while the decline in retail sales narrowed to-2 per cent, according to Caterpillar Inc's website. The recovery of the aviation industry remains to be seen, and according to IATA forecasts, a significant recovery will not be seen until the second half of 21 or 22.
Investment suggestion: it is estimated that the EPS of the company for 21-23 years is 0.24x0.31x0.36 Hong Kong dollars per share, and the PE of the corresponding previous share price is 10max 7x6X respectively. With reference to comparable companies, the company is given a 21-year valuation of 13 times PE and a "buy" rating corresponding to a reasonable value of HK $3.09m per share.
Risk hints: persistent risk of epidemic; risk of trade friction; risk of rising prices of raw materials
