Guangri Co., Ltd. (600894): First-quarter results shine, Hitachi investment returns exceed expectations
The company announced the 2018 and 2019 first quarter results: 2018 operating income54.
6 billion, an increase of 13 in ten years.
6%; net profit attributable to mother 西安桑拿网 is 1.
3.4 billion, down 66 before.
Revenue for the first quarter of 19 11.
4 billion, an increase of 11 in ten years.
3%, net profit attributable to mother 1.
2.8 billion, an increase of 527% over the same period.
We think the company’s performance in 19 is expected to stop the decline and improve, and it is expected that the net profit attributable to mothers will rise to 3 in 19/20.
4.7 billion, 5.
3.0 billion, corresponding to 19/20 PE of 18.
2 times, 12.
5 times, maintaining the level of “Careful Recommendation-A”.
Revenue increased by 13 in 2018.
6%, while net profit attributable to mothers fell 66.
The initial 6% includes: (1) Breakthrough in the provision for impairment of financial assets and goodwill.
In 2018, the company made provision for impairment of the new shares of the holders1.
At the same time, it provided a total of 59.16 million in impairment of goodwill and intangible assets formed during the acquisition of the former Guangzhou Songxing Electric Co., Ltd. and its subsidiaries. (2) Sluggish downstream demand and a significant decline in gross profit margin.
The elevator industry has entered a mature period, with a complete range of products, falling prices year by year, and excess capacity, especially the homogeneity of low-end and low-end products, while the downturn in real estate has led to excess capacity in the elevator industry.”” Significantly cut corporate profits.
The company’s overall business gross margin for 18 years was 14.
6%, a decrease of 3.
7pct, the decline rate of elevator business, gross profit margin of 15 years.
6%, a decrease of 5.
6pct, component gross margin 11.
5%, down 2.
9 points; (3) Three fees have not changed much.
Selling expenses for 2018 1.
700 million, management expenses 3.
900 million, little change in the long run, and the three fees remain unchanged under the condition of a positive increase in operating income, reflecting the company’s ability to control cost gaps in the industry’s trough. At present, the elevator national marketing engineering service network has 34 subsidiaries.17 service centers, 47 offices and 741 dealers have basically established a marketing network.
(4) Investment income decreased slightly.
The investment income of the associated company Hitachi (30%) has always been an important part of the company’s profits. In 18 years, Hitachi related-party transaction deductions and other reasons caused the recognized investment income to decrease slightly, and the 18-year investment income2.
700 million, 2 more than 17 years.
900 million decreased slightly.
Net operating cash flow has dropped significantly, and bills receivables and accounts have grown rapidly, but with less risk.
Net cash flow from operating activities in 20182.
700 million, a decrease of 36% each year. First of all, the customer’s cash flow is poor, and it is more seriously paid in the form of accounts receivable or bills.
400 million, an increase of 2 every year.2 billion, bills receivable of 51 million, an increase of 13 million each year; and the purchase amount of raw materials, spare parts and other inventories increased, so the purchase of goods, receiving cash for labor services increased.
The company proactively controls the quality of accounts when the downstream industry is in a downturn, including reducing cooperation with customers with poor credit, and receivables that potentially accept risk resolution, rather than accounts with receivables with value at risk, which accounts for 21% of revenue%, And the elevator industry generally receives 30% in advance, the business model determines that the industry’s operating risks are relatively small.
Revenue for the first quarter of 2019 increased by 11.
3%, and the net profit of the mother increased by 527%, basically including two points: (1) there is a low cardinality effect.
Net profit attributable to mother in the first quarter of 2018 was approximately 20 million (net profit attributable to mother in the first quarter of 2017).
The first quarter of 2018 was mainly due to the downturn in the industry: a serious round of real estate changes was introduced before the end of 17, the price of raw materials was also relatively high, the 南京桑拿网 gross profit margin was gradually faster, the industry was generally expanding, and the company’s spare parts business had to bear the burden of elevator manufacturers”Squeezing”, the overall profitability decreased rapidly; (2) Hitachi’s investment income growth rate broke through in the first quarter of 19, and the achievement of performance exceeded expectations.
The first quarter of 19 1.
1.2 billion, mainly provided by Hitachi, an affiliate. Hitachi’s operating conditions improved from the second half of last year. Orders at the end of 18 were confirmed in the first quarter of 19th. The performance of the performance was much higher than expected, and the overall overall trend was improving.
Gross profit margin continued to decline, net interest rate rebounded significantly, and the situation in the second half of 19 tried to continue to improve.
Overall gross profit margin for the first quarter was 12.
2%, 1 point drop in one year, net interest rate 11.
1%, an increase of 9 per year.
We believe that the main driving forces for the company’s performance in the coming years include: (1) Elevator renovation projects are expected to provide new demand.
Retrofitting old ladders with a long service life requires the need to retrofit elevators or renovate the decoration function. Old-fashioned buildings are affected by the aging population and have also created a market demand for retrofitting elevators.
In addition, the Ministry of Housing and Urban-Rural Development has recently released the “Residential Project Specifications” (draft for comments), which stipulates that residential buildings with 4 or more floors (existing elevators generally installed with 6 or more floors), or the design of the residential entrance floor distance from the building designElevators should be installed in newly built residential buildings with a ground height exceeding 9m, which will also release a certain demand.
(2) The 18-year update cycle has begun, reaching a peak in 2021.
The life of the elevator is generally 10-15 years. The last wave of sales peaked in 06-07 and the highest peak was in 14-15. The current update tide has begun. It has a certain hedging effect on the decline in sales in actual terms.The number of elevators in use each year exceeds 6 million units. In recent years, the number of elevators supplemented and reconstructed each year has remained at about 500,000 units, reaching a peak of renewal around 2021.
(3) The growth rate of real estate completed area is expected to usher in an inflection point.
Although the area completed in January-February did not pick up significantly, from the perspective of trends, the turning point at the bottom of completion may have appeared before, and it is currently in a state of turbulence. New construction is often about 3 years ahead of completion, corresponding to the new construction rebound in 2016, 2019Whether the annual completion of the project is absolute or exceeds the growth rate, it is expected to bottom out.
More than 18 years have passed since the completion of the overcapacity clearance, and the elevator price has stopped the downward trend.
Absolutely independent brands are developing rapidly, but foreign brands are continuing to expand. Some elevator industries will continue to be sustainable in the future, but the vicious competition is unsustainable. Over 18 SMEs have been eliminated in 18 years.The overall trend of “big companies” is developing, and prices may fall further, but it is now close to the “bottom line” of the industry. It is expected to stabilize and rebound slightly in 19/20.
Maintain the level of “prudent recommendation”.
The company’s business includes elevator complete machine manufacturing, sales and engineering services, elevator parts manufacturing and logistics distribution services, covering the entire elevator industry chain. At present, elevators are the core product and the upstream and downstream industry chains are continuously extended.
“The arrival of the elevator update cycle, the installation of new elevators in the old house and the turning point of completion will appear.” Driven by the three factors, we believe that the company’s performance in 19 years has promoted the stagnation trend.Pick up to 3.
4.7 billion, 5.
3.0 billion, corresponding to 19/20 PE of 18.
2 times, 12.
5 times, maintain prudent recommendation rating.
Risk reminder: prices fall too fast, real estate investment grows faster than expected, and raw material prices change