Event
The company released a quarterly report, 2020Q1 achieved operating income of 215 million yuan, + 3.72% year-on-year, to achieve a net profit of 22.08 million yuan,-15.78% year-on-year.
Wind power installation project was delayed in the first quarter, affecting the shipment of structural adhesive for wind power blades. According to wind data, domestic wind power installed 2.36GW in the first quarter decreased by 50.63% compared with the same period last year, while the company's production did not stop, resulting in inventory overstocking. As of 2020Q1 inventory balance of 207 million yuan, year-on-year + 43.60%, it is expected that the inventory of wind power glue will be digested in Q2, coupled with Q2 normal installed sales, the second quarter performance is expected to achieve significant growth.
The military electromagnetic compatibility business is expected to lose money in the first quarter and will gradually improve with the progress of the project.
The first quarter is a traditional off-season for military business, but costs are calculated as usual. It is estimated that Q1 must control technology losses, affecting the company's overall net profit level, while pulling down the comprehensive gross profit margin, 2020Q1 gross profit margin 33.59%, year-on-year-3.33pct. With the gradual progress of military projects in Q2, the financial situation that must be controlled will gradually improve.
The company announced that it plans to invest in the construction of southwest industrial base in Chengdu, with a total investment of 500 million yuan, including industrialization projects such as electromagnetic compatibility, aerospace electronic system-level equipment, military electronic adhesive, electronic components testing, etc. it is planned to start construction within 6 months from the date of delivery of the project land, cap within 12 months from the date of automatic construction, and formally put into production within 24 months from the date of automatic construction. The project is conducive to the layout of the company's military science and technology plate in the southwest and further enhance its competitiveness.
In December 2019, the company started a step-by-step acquisition of Jing Hanyu, which is engaged in the testing business of military electronic components. In February 2020, 70 million of the company acquired a stake of 8.51%. The first small step was completed, and subsequent acquisitions will gradually thicken the company's performance. Jing Hanyu's performance volume is about 100 million, which will greatly increase Kangda's market capitalization space after it is fully incorporated into the listed company.
Profit forecast: the company's net profit from 2020 to 2022 is expected to be 1.43,2.01 and 280 million yuan respectively, maintaining a "buy" rating. Assuming that Jing Hanyu will completely merge the table next year, regardless of the time of the table, the performance of the 2021 exam will be about 250 million yuan, with a target market value of 6.7 billion yuan.
Risk hints: Jing Hanyu's acquisition progress is not as expected, raw material price fluctuations, goodwill impairment risk, etc.