The three-quarter report is in line with expectations
Guangdong Rongtai's third-quarter report achieved revenue of 944 million yuan, an increase of 25.72% over the previous year; net profit of 79.21 million yuan, an increase of 204.37% over the previous year; and basic EPS of 0.11 yuan. Among them, Q3 achieved revenue of 340 million yuan in a single quarter, an increase of 42.78% over the previous year; net profit was 29.24 million yuan, an increase of 456.53% over the previous year. The results reported for the third quarter were in line with our expectations. The traditional chemical business stabilized at a low level, and Senhua Yiteng's IDC business was the main source of profit growth. The company expects net profit range of 9351-114.29 million yuan for the whole year, an increase of 350%-450% over the previous year. We judge that Senhua Yiteng contributed more than 81 million yuan.
Senhua Yi Teng added orders from major customers, and annual performance is guaranteed
The company acquired the subsidiary Senhua Yiteng at the beginning of the year. Senhua Yiteng promised an annual performance of 88.4 million yuan, and the consolidated net profit for February-December was at least 81 million yuan. Furthermore, Senhua Yi Teng's recent major customer development work has progressed smoothly. It has recently developed major clients such as Suning and Gome. Agreements with the Chinese Academy of Sciences are still being negotiated. Customer order reserves are sufficient, and annual performance is guaranteed.
Issuance and increase data centers, adding 6,000 new cabinets in the next five years
On September 10, the company announced that it plans to issue no more than 190 million additional shares, raise no more than 1,659 million yuan in capital, and invest in the construction of the Zhang Beiyun data center. The Zhangbei region is close to Beijing and can be directly connected to Beijing through optical fiber. At the same time, it has unique natural resource advantages, abundant electricity resources, and a low average annual temperature, which is conducive to reducing the operating costs of the company's IDC computer room. Currently, Senhua's IDC computer room still relies on leasing operators or third party computer rooms, and does not own an IDC computer room. The operating model of the leased computer room has uncertainties such as capacity expansion restrictions and lease exchanges, so it is not in line with the company's long-term development requirements. The company plans to launch 2,000 cabinet production capacity each year from 2020 to 2022, and build a total production capacity of 6,000 cabinets by 2022. At that time, the company's cabinet ownership will be greatly increased.
Maintain an “increase in holdings” rating
The company's traditional chemical business remained stable. Profits mainly came from Senhua Yiteng. The net profit forecast for 16-18 was lowered to 1.06/1.50/205 million respectively, and the corresponding EPS was 0.15/0.21/0.29 yuan respectively. The current price corresponds to 2016-2018 PE, which is 64/45/33x, respectively. A segmented valuation of the company's business was carried out. The chemical business was valued at 3 billion yuan, and the IDC business valuation range was 4.5 to 5 billion yuan. The company's overall reasonable valuation range is 7.5-8 billion yuan, and the corresponding reasonable price range is 10.64-11.35 yuan, maintaining the company's “increase in holdings” rating.
Risk warning: The growth rate of the IDC industry is slowing, and the promotion of new businesses such as cloud computing has fallen short of expectations.
