In 2018, revenue increased, net profit decreased, and comprehensive gross profit margin declined, which was basically in line with expectations. In 2018, the company achieved revenue of 2.2 billion yuan, an increase of 6.9% over the same period last year, and a net profit of 50.33 million yuan, down 52% from the same period last year. Revenue growth was mainly due to a 17.9% year-on-year increase in lithium cathode materials business, while revenue from lithium battery equipment business decreased by 12.9% year-on-year. The comprehensive gross profit margin fell 2.3 percentage points year-on-year to 15.7%, of which the cathode material gross profit margin business fell 3 percentage points, and the lithium equipment business increased by 1.2 percentage points. The sales / administrative expense rate decreased by 0.9 percentage points year-on-year, but the financial expense rate increased by 2 percentage points year-on-year. Operating cash flow is getting better, with a net operating cash flow of 171 million yuan in the fourth quarter of 2018.
Results fell in the first quarter of 2019, below expectations. Revenue in the first quarter of 2019 was 382 million yuan, down 37% from the same period last year, while the net profit of returning home was 22.28 million yuan, down 21.5% from the same period last year. The decline in revenue and net profit is mainly due to a sharp drop in the average selling price of cathode materials for lithium batteries. In the first quarter, the operating income of cathode materials was 180 million yuan, down 54.6% from the same period last year, and the revenue of lithium devices was 180 million yuan, an increase of 7.5% over the same period last year.
The cathode material is gradually increasing, and the high-end production capacity is accelerated. In 2018, the revenue share of the lithium materials business increased by 6 percentage points to 66%. The first phase of the 3000 tons / year project of the Yingde base reached production, the company gradually released ternary materials, and the power high-nickel multi-materials also increased rapidly. At present, the construction of 5000 tons / year high nickel cathode material capacity is being accelerated.
The layout of lithium power equipment throughout the process, Haoneng science and technology successfully completed the performance commitment. In 2018, the subsidiary Haoneng Technology launched a new high-speed extrusion coating machine and laser polar ear cutting machine, leading the world in terms of technical level. In addition, Haoneng Technology has launched products in water treatment reverse osmosis film coating machine, optical film coating machine and hydrogen fuel cell coating machine. By the end of 2018, Haoneng Technology had successfully fulfilled its performance commitment, exceeding its performance commitment by 37% in three years. The company intends to acquire Yuchen Automation and Chengjie Intelligence of the front, middle and rear equipment engaged in lithium battery production. If the acquisition integration is completed, the company will have the ability to provide the whole line, and the market influence will be greatly improved.
Maintain the "overweight" rating. It is estimated that the net profit of the company from 2019 to 2021 is 1.47,2.39 and 361 million yuan respectively, the corresponding EPS is 0.69,1.13,1.7 yuan per share respectively, and the latest price corresponding to PE is 26.0,16.0,10.6 times respectively. Taking into account the strong investment willingness of the major customers bound downstream of the company, and the high demeanor of the new energy vehicle industry, the company is expected to maintain high growth and maintain its "overweight" rating in the next three years.
Risk hint: the decline of new energy vehicle subsidy policy leads to the decline of new energy vehicle demand, the lower-than-expected pace of cathode material production, and the goodwill impairment risk brought by mergers and acquisitions.
