Lower-than-expected performance in 2018
The company announced its 2018 annual report that in 2018, its operating income was 872 million yuan (+ 20%), net profit was 115 million yuan (- 33%), non-net profit was 38 million yuan (- 77%), corresponding to EPS was 0.81 yuan, and the performance was lower than expected. The company's performance growth mainly comes from the diamond line, and the decline in profits is mainly due to the decline in the unit price and gross profit margin of the photovoltaic industry after the 531 New deal. We believe that the price of the diamond line has dropped sharply in the past 18 years, and the shipments and capacity utilization are lower than expected. It is expected that the 19 annuity rigid line price and gross profit margin will maintain the status quo, and the new wireless rechargeable magnetic materials are expected to become a new growth point. The company's 19PE is valued at 51 times, significantly higher than comparable companies, downgraded to "neutral".
The share of revenue of the company's 2018 annuity rigid line continues to increase to 59%.
In 2018, the company's sales revenue of the Kumgang line reached 516 million yuan, accounting for 59% of the total revenue of Prida, an increase of 10.11pct compared with 2017. Benefiting from the production capacity of the fund-raising project, the diamond line business is the company's main revenue growth point, with shipments reaching 4.21 million km in 2018, with an average price of RMB122km / km, down 24.7% from the 2017 average annual price of RMB162km / km. Sales revenue of laminated wire, conductor and wireless charging coil products reached 43 million yuan, 240 million yuan and 16 million yuan respectively, a decrease of 9.40%, 13.79% and 22.06% respectively compared with 2017, which was lower than expected.
The comprehensive gross profit margin decreased 13.50pct compared with the same period last year, and the expense rate increased significantly
The company's overall gross profit margin was 27.96%, down 13.50pct from the same period last year, and the net profit rate was 13.23%, down 10.64pct from the same period last year. Among them, the gross profit margin of diamond wire, ultra-fine conductor, coated wire and wireless induction coil decreased by 22.67,3.44,10.53 and 15.49pct respectively. The decline in gross profit margin of diamond thread 22.67pct is mainly due to lower prices and higher manufacturing costs (+ 482.5%). In 2018, the company's sales expenses increased by 82.04% year-on-year (freight and operating expenses increased); management expenses increased by 100.29% year-on-year (wage growth, equity incentives and IPO plant depreciation); and R & D expenses increased by 104.4% (investment in new product R & D). The net operating cash flow is 191 million yuan (+ 732%), mainly due to the reduction of accounts receivable and bills receivable, the reduction of prepaid accounts (purchase of raw materials) and the enterprise income tax refunded by the new policy of the tax law.
Fund-raising layout of wireless rechargeable magnetic materials, the company is expected to find new performance growth points
According to the company's announcement on February 21, 2019, the global wireless charging market will grow from $1.7 billion in 2015 to $15 billion in 2024, with a compound annual growth rate of 27%. The company raised 500 million yuan into the annual production of 300 million pieces of wireless charging materials and devices project, the project will achieve an annual income of 1.795 billion yuan, a total profit of 180 million yuan. With the popularity of wireless charging products and the commissioning of the company's products, the company is expected to find new performance growth points.
Performance growth slowed and gross profit margin fell, profit forecast was lowered, rating was downgraded "neutral".
Taking into account the 2018 annuity rigid line capacity utilization and gross profit margin level, we downgrade the profit forecast, we estimate that the company's operating income of 1.000.135x1.969 billion yuan in 19-21, net profit of 1.18x146xt. 20 million, corresponding to EPS of 0.82 PE 1.54 yuan, compared with the company's 2019 average PE 18 times, the company 19PE valuation of 51 times, significantly higher, downgraded to "neutral".
Risk tips: the risk of high customer concentration; the risk of falling shipments caused by oversupply in the past 19 years; the risk of rising labor costs of raw materials; the unsmooth market expansion of new products; the risk that the production capacity and shipments of new products are not up to expectations.