The performance slightly exceeded expectations. The company announces its 2020 results. In 2020, the company achieved an operating income of 1.562 billion yuan, an increase of 34.73% over the same period last year, a net profit of 213 million yuan, an increase of 47.05% over the same period last year, and a net profit of 199 million yuan, an increase of 108.88% over the same period last year. The company focused on the main business in 2020, and the product performance represented by GIS combined appliances achieved high growth, which contributed to the overall performance slightly exceeding expectations. The company will achieve basic earnings per share of 0.40 yuan in 2020 and plan to pay a cash dividend of 0.7 yuan (including tax) for every 10 shares.
Focus on the main business, some advance and some retreat, and the three rates have been greatly improved. Since 2020, the company has continued to promote the development strategy of "focus on the main business, advance and retreat", and carry out various businesses in an orderly manner. At present, the company focuses on the development of high-voltage isolation, grounding switches, combined electrical appliances (GIS), circuit breakers, high-and low-voltage complete sets of equipment manufacturing plate, on the basis of effectively going deep into the field of power engineering general contract, forming the bonding and consolidation of all aspects of new energy power services. At the same time, the company completed the equity transfer of Changgao Real Estate Company and Changgao Integrated Energy Services Company, speeding up the divestiture of the company's non-main business. In the company's "focus on the main business, advance and retreat" strategy, the company has greatly saved unnecessary expenses, and the three rates have been greatly improved. Among them, the company achieved the sales expense rate and management expense rate of 4.42% and 6.05% respectively in 2020, down 4.39Pcts/3.41Pcts respectively from the same period last year, helping to accelerate the growth of the company's net profit.
The power transmission and transformation plate has been fruitful, and the development of power engineering plate has been accelerated. In 2020, the company's transmission and transformation equipment sector achieved business income of 1.311 billion yuan, accounting for 83.93% of the company's total revenue, an increase of 44.44% over the same period last year. The company has achieved rapid growth in combined electrical appliances (GIS), isolation and grounding switches. Among them, in terms of key projects, the subsidiary Changgao switch successfully completed the delivery of UHV products from Qinghai-Henan, Shaanxi-Wuhan, Yazhong-Nanchang UHVDC projects, Zhumadian-Nanyang Station expansion project and Xinjiang Shanshan (Tuha) 750kV substation construction project, and won the bid Baihetan ~ Jiangsu plus or minus 800kV UHVDC project.
Subsidiary Changgao Electric has participated in many key projects, such as the Zhangjiakou Olympic Project in northern Hebei, the national key poverty alleviation project of "three districts and two prefectures", the key project of changing coal to electricity in Tianjin, and the key project of 550KV in Changsha, Hunan Province. At the same time, the company also accelerated its development in the power engineering sector, not only made breakthroughs in Jiangsu, Henan and other important markets, won the bid for key electrification projects of the Qinghai-Tibet Railway, and the total order volume increased by 50.79% over the same period last year. In March this year, the company also successfully transferred Chunhua Zhongluo 80MW wind power project and Shenmu smooth 40MW photovoltaic project.
Investment advice: cover for the first time, giving the company a buy-An investment rating. We estimate that the company's income from 2021 to 2023 will be 19.80,25.19 and 3.216 billion yuan respectively; the revenue growth rate will be 26.8%, 27.2% and 27.6% respectively; and the return net profit will be 2.80,3.64 and 474 million yuan respectively, with a growth rate of 31.2%, 30.1% and 30.3% respectively. For the first time, give the company a Buy-An investment rating.
Risk hint: industry policy changes are not as expected.