Twin-engine driven growth: downstream furniture industry changes + mid-stream pattern optimization + upstream integration to enhance competitiveness (1) "epidemic" drives telecommuting / service infiltration: in the context of networking and cloud infiltration, the epidemic has promoted the demand for telecommuting, and the demand for network services is increasing day by day. The company gradually improves the national data center nodes, extends from first-tier to second-and third-tier cities, and continues to increase the total bandwidth and the number of cabinets to ensure long-term growth; 5G construction is accelerated, and the demand for data services will continue to grow in the future.
(2) Great changes are brewing downstream of woodworking machinery: first, the industry cycle is expected to enter the upward period in 2020, while the intensive delivery cycle of the real estate industry is coming, and there is expected to be a high downstream demand in the next two years; second, driven by the new house "fine decoration" policy, the "standardized" configuration of customized furniture increases permeability; third, equipment localization, a comprehensive substitute for imports.
With the irresistible trend of "going up the cloud", the resource attribute of the IDC industry is highlighted, and it is the only one that has entered a period of rapid expansion and is expected to catch up with the Ministry of Industry and Information Technology recently required to make full use of the new generation of information technology to support epidemic prevention and control and enterprises to resume work and production. Such as: promote cooperation between manufacturing enterprises and information technology enterprises, support the use of cloud computing to vigorously promote enterprises on the cloud. Big data, cloud office is significantly accelerated, coupled with MCN and other ways to further drive Internet consumption, IDC industry resource attributes highlight, supply exceeds demand.
Wholly-owned subsidiary's only network main business IDC, the national layout of more than 70 data center nodes, the total bandwidth of 15T, covering first-tier and second-tier and third-tier urban areas. The only network invested in Guangdong Zhixian in February 19 to increase cabinet business and improve business territory. At the end of 19, the number of cabinets reached 2300 million, and the number of cabinets is expected to reach 3300 by the end of 20th. It is expected that the number of cabinets will increase significantly in the next few years.
In the future, the only network will actively promote the research, development and deployment of edge computing, and plans to expand the national data center nodes and edge nodes to 200-250 in the next three years, with a total bandwidth of 35-50T. At present, the company's major bandwidth service customers include Huawei, JD.com and other giants, and the operators are rich in resources. In the future, the company will carry out business around Beijing, Hangzhou, Nanjing, Xiamen and other core cities, breaking the situation that was limited to Guangdong in the past.
The only network performance commitment is 5500 6850 pounds in 2017 and 2020. In the previous two years, the actual 5891.6 million pounds was 71.856 million yuan, and the completion rate was 105 million yuan. The 19-year profit estimated at 105% completion rate is nearly 90 million yuan. It is expected that it will still be over completed in 2020, and the net profit is expected to exceed 100 million yuan.
2019 stable performance, traditional main woodworking machinery is expected to benefit from cyclical upward and real estate completion industry chain steady growth in 2019 performance KuaiBao: annual income 1.55 billion (YoY+37.7%), home net profit 207 million (+ 26.6%), net interest rate 13.4% (14.5% in the same period last year) 19Q4 income is 450 million (YoY + 44.2%), net profit is 59 million (+ 26.6%), net interest rate is 13% (15% in the same period last year). In the first three quarters, cash received from products sold is 1.16 billion, net operating cash flow is 220 million, which exceeds current income and current net profit respectively.
The company is one of the dual leaders of woodworking machinery, and in 2020, it will benefit from the recovery of the investment cycle of the downstream furniture industry and the intensive completion delivery of the real estate industry, coupled with the promotion of fine decoration policy, the capital expenditure of small and medium-sized furniture factories is expected to increase from Q2 or Q3.
Woodworking machinery business is expected to grow steadily.
Profit forecast: the company's traditional business is in a leading position in China and is expected to benefit from the upswing brought about by industry cycle repair and real estate completion delivery in the future. On the other hand, the only network of wholly-owned subsidiaries holds important commercial customer resources, deeply arranges IDC business, lays out important cities across the country, and is expected to continue to expand the number of nodes, service bandwidth and cabinets in the future. The consolidated results of the acquisition of the only network exceeded our previous forecasts, with projected net profits of 207 million yuan, 275 million yuan and 421 million yuan for 19-21 years.
Rating. The target price is 42.22 yuan, about 30 times PE in 2020.
Risk tips: poor investment / completion in the real estate industry leads to downward demand in the furniture industry; increases in raw materials / labor prices lead to a decline in corporate profitability; peer price cuts lead to a decline in company share; and the slower-than-expected expansion speed of subsidiaries affects follow-up income.