Summary of the report:
Key data: in the first three quarters of 2019, operating income increased by 29.01% year-on-year to 1.423 billion yuan, and net profit attributed to shareholders of listed companies increased by 83.22% to 94.77 million yuan, realizing EPS0.18 yuan. The performance is basically in line with expectations. The company also predicts that cumulative net profit for the whole year 2019 will increase by 70% to 100% compared with the same period last year.
Main points of investment
Profitability remained stable compared with the same period last year. From the main operating data, the company's main business maintains a good development trend. According to the disclosure, Q3 achieved an operating income of 514.5 million yuan in a single quarter, an increase of 18.2% over the same period last year; the net profit attributable to shareholders was 32 million yuan, an increase of 27.5% over the same period last year; and the comprehensive gross profit margin and net sales margin were 21.47% and 5.99% respectively, an increase of 0.462 percentage points and 0.233 percentage points respectively over the same period last year.
Since the second half of the year, key projects have been won frequently, demonstrating their competitive strength in high-end subdivision fields such as nuclear power. The bid-winning projects announced on July 23 involve Baihetan Hydropower Station, South Sichuan Intercity Railway, Weidabei Power Plant in Indonesia, etc., with an amount of 223.3 million yuan. The project announced on August 28 involves the long material system rolling line of Guangxi Iron and Steel Fangchenggang Base, Jordan oil shale and other projects, with an amount of 211.5 million yuan. The bid-winning projects announced on October 18 involve Xiapu Nuclear Power demonstration Fast reactor, Hefei Metro, Maanshan Iron and Steel Co., Ltd., with a total amount of 209.9 million yuan. The projects covered by the above orders include national and local key projects, important projects in countries along the "Belt and Road Initiative" route, and projects that require high technical performance of cables (such as nuclear power projects). It is used in rail transit, electric power, steel, chemical and other market segments, with a total amount of 645 million yuan. We believe that these orders not only provide a guarantee for the sustained growth of future performance, but also highlight the company's competitive strength in the high-end market segment.
Maintain the "recommended" rating: we appropriately adjust our earnings forecasts and expect the company to achieve EPS of 0.20,0.26,0.31 yuan under current equity in 2019-2021, corresponding to 52.04,41.03 and 34.31x Phand E.
Risk tips: market expansion may not meet expectations; cost control is effective or deviates from expectations.