台海核电(002366)2018年年报及2019年一季报点评:静待核电重启 最艰难的时间已过

Taihai Nuclear Power (002366) 2018 Annual Report and 2019 Quarterly Report Reviews: Waiting for Nuclear Power to Restart the Most Difficult Time Has Passed

中信證券 ·  04/30/2019  · Researches

Taiwan Strait Nuclear Power achieved an income of 1.38 billion yuan (- 44.1%) in 2018, deducting non-return net profit of 300 million yuan (- 66.9%), 19Q1 realized income of 350 million yuan (- 24.3%), and deducted non-return net profit of 100 million yuan (- 33.2%). The nuclear power industry is in the doldrums. Xiaobai Maimai Inc's environmental degradation has an impact on the company's performance. Combined with media reports and industry chain research, we expect nuclear power to restart in 2019 is more likely, the company's most difficult time has passed, if nuclear power can restart smoothly, the company's performance is expected to gradually improve.

Performance profile: the nuclear power industry is in the doldrums, the credit environment is deteriorating, and the company is under pressure. In 2018, the company's revenue from offshore / onshore nuclear power equipment was 680 million yuan, compared with 15.5% of the same period last year. The company's stock price fluctuated sharply, coupled with the deterioration of the credit environment, the company's operation was hit, and the financial expense rate for the current period reached 13.2% (+ 7.4pcts). 19Q1, with the recovery of the nuclear power industry and the introduction of China Nuclear Fund as a strategic investor by major shareholders, the company's operating conditions have improved and its performance has narrowed down.

Cash flow: cash flow is improving. Starting from 18H2, the company's operating cash flow has improved significantly, and the net operating cash flow of 18Q3/18Q4/19Q1 is 2.0 yuan, 1.8 billion yuan. On the asset side, the inventory of 18Q3 to 19Q1 fell by 780 million yuan, indicating that with the recovery of nuclear power construction, the speed of customer acceptance of products was accelerated; on the debt side, long-term loans from 18Q3 to 19Q1 and non-current liabilities due within one year decreased by 430 million yuan, and the debt situation began to improve. We expect the company's cash flow to improve significantly in 2019.

Industry boom: nuclear power construction is expected to restart. In China, no new unit has been approved to start for 3 years since 2016. According to China Securities News and other media reports, on March 18, the Ministry of Ecology and Environment announced the Environmental impact report of Unit 1 and Unit 2 of Fujian Zhangzhou Nuclear Power Plant (Construction Phase) and the Environmental impact report of Phase I of Guangdong Taiping Ling Nuclear Power Plant accepted by the Ministry of Ecology and Environment on March 18. According to two environmental impact assessment documents, the construction of Zhangzhou Nuclear Power Unit 1 and Taipingling Nuclear Power Unit 1 is scheduled to start in June 2019. Liu Hua, vice minister of the Ministry of Ecology and Environment and director of the State Nuclear Safety Administration, said on April 1 that the country would continue to develop nuclear power on the premise of ensuring safety. At the end of April, Zhang Tao, general manager of China Nuclear Power, said that CNNC was stepping up preparations for the FCD of the Zhangzhou nuclear power project in Fujian Province. Combined with the industry chain survey, we expect that the probability of nuclear power restart in 2019 is high.

The rest is the king: the countercyclical layout of nuclear power in the Taiwan Strait and the improvement of the company's competitiveness. We believe that enterprises that still adhere to the counter-cyclical layout of the nuclear power industry at the trough of the industry are expected to become the biggest beneficiaries after the start of the new cycle of nuclear power construction. The business of nuclear power across the Taiwan Strait has gone from a single main pipeline to seven major equipment on the nuclear island, from front-end construction to back-end processing. In addition, the company is involved in offshore nuclear power plants. In January 2018, China's first offshore nuclear power plant project was launched in Yantai, Shandong Province. Offshore nuclear power plant is a comprehensive energy supply platform for electricity, heat, steam, fresh water and so on. Industrial parks in coastal cities are expected to take the lead in becoming customers of offshore nuclear power plants. The company announced in December 2018 that it signed an order of no more than 5.85 billion yuan with the parent company, Taiwan Strait Group.

Risk factors: the progress of nuclear power restart is not as expected; the progress of offshore nuclear power business is not as expected.

Investment suggestion: combined with the annual report and quarterly report, as well as the arrival time of new orders for onshore nuclear power equipment later than expected, we downgrade the company's 20-year net profit forecast for 2019 to 840 million yuan (the original forecast is 69,000,000 yuan). At the same time, we supplement the 2021 net profit forecast of 1.09 billion yuan. We expect that nuclear power construction is more likely to restart this year, if nuclear power can restart smoothly, the company is expected to enter a period of performance recovery. Maintain the target price of 19.8 yuan and maintain the "buy" rating.

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