Event

In the first quarter of 2021, the company achieved income of 880 million yuan, up 69% from the same period last year; net profit from home was 60 million yuan, up 915% from the same period last year; net profit from non-return was 50 million yuan, up 1377% from the same period last year; weighted ROE was 1.92%, up 1.72 pct.; net operating cash flow from 231 million yuan over the same period last year, down 123% from the same period last year.

Main points of investment

The company's revenue and net profit in the first quarter of 2021 increased significantly compared with the same period last year, effective orders continued to transform, institutional reform released operational vitality, and the scale expanded steadily; the net cash flow of operating activities in the current period decreased significantly compared with the same period last year and month-on-month, mainly due to the increase in year-end bonus payment, supplier accounts and bid margin.

2) the company's strategic customer cooperation and orders continue to improve, and the rail transit market segment is highly competitive, with a valid order of 7.02 billion yuan (excluding winning the bid but not yet receiving a deposit order of 360 million yuan) and full production orders.

The company increased the gradual recovery of receivables in the first quarter, and the credit impairment loss decreased by 31% compared with the same period last year.

The quarterly gross profit margin of orders issued under pressure on raw materials still improved, and the operating quality continued to improve. 1) the company's Q1 sales gross profit margin in 2021 was 30.3%, up 4.5 pct. compared with the previous quarter; operating costs accounted for 69.7% of total revenue, down 4.5 pct. cost reduction and efficiency achieved results: the new revenue criteria divided transportation, after-sales and other expenses into operating costs, and the company improved profitability through comprehensive efficiency improvement. In the face of upward pressure on the price of upstream raw materials, the company uses the advantage of scale to sign bulk procurement plans to effectively smooth price fluctuations.

2) the company's Q1 three fees in 2021 remained at a normal level: sales expense rate 13.3%, year-on-year increase of 0.1pct.; management fee rate 4.2%, year-on-year decrease of 2.9pct.; R & D expense rate 4.4%, maintaining a high level, reflecting the company's good cost control ability and sustained high R & D investment, and the internal operation reform has achieved remarkable results.

The elevator industry has entered a period of steady growth, and the market share represented by independent brands is expected to continue to rise. with the strengthening of infrastructure construction such as real estate, rail transit and old reform, the demand for domestic escalator equipment is expected to continue to expand, and the later market is also expected to gradually enter a period of rapid development; the growth of new construction area of downstream real estate and the replacement demand for stock market renewal will support the sustained and steady growth of the elevator industry. It is estimated that by 2025, the average annual compound growth rate of elevator sales in China is expected to reach 9%. In 2021, elevator sales are expected to reach 1.1 million units, of which the completion of real estate will bring new demand for more than 900000 units and rail transit will increase by 11000 units. As the leader of our own brand, the company actively promotes the research and development of new products and technical services, strengthens the market competitiveness, and the market share is expected to continue to increase.

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 for 2021-2023 is 5.8x690 million yuan, a year-on-year increase of 20%, 18%, 14%, corresponding to an EPS of 0.73, 0.86, 0.99 yuan, and the corresponding pre-PE is 13-11-10 times, maintaining a "buy" rating.

Risk hint

Investment in real estate infrastructure is lower than expected; steel prices rise sharply; elevator safety accidents; industry competition deteriorates.