Huahong Technology (002645): Performance Meets Expectations, Double Benefits of Extended Equipment Operation

Huahong Technology (002645): Performance Meets Expectations, Double Benefits of Extended Equipment Operation

Events: (1) The company released its 2018 annual report and realized revenue in 201819.

160,000 yuan, an increase of 47 in ten years.

38%; net profit attributable to mothers1.

570,000 yuan, an increase of 26 in ten years.

78%; of which in the fourth quarter, the single quarter achieved revenue of 5.

15 ppm, an increase of 40 in ten years.

24%; net profit attributable to mother is 0.

35 ppm, a reduction of 3 per year.

67%.

(2) January 2019 quarterly report shows that 2019Q1 achieved revenue4.

82 ppm, an increase of 45 in ten years.

79%; net profit attributable to mother is 0.

380,000 yuan, an increase of 27 in ten years.

16%.

The prosperity of the scrap steel industry has improved, and the equipment + operation layout has fully benefited.

In terms of products, the company’s renewable resource processing equipment, elevator parts, scrap steel processing and trading in 2018 respectively achieved revenue11.

4.1 billion, 5.

900 million yuan, 1.

67 trillion, 114 changes each year.

16%, 2.

12%, -0.

97%.

Among them, the renewable resource processing equipment contributed the main income increase, which was mainly due to the continuous improvement of the prosperity of the scrap steel industry in 2018 and the consumption of scrap steel1.

88 trillion and a scrap ratio of 20.

2%, the demand for the company’s equipment increased, and the company’s broken line and other products sales grew rapidly.

On January 30, 2019, the Executive Meeting of the State Council passed the “Administrative Measures for Scrap Temporary Recycling (Revised Draft)”, which stipulates that the “five major assemblies” of dismantled cars can be sold to remanufacturing companies as required. This program will significantly improve the scrapped carsRecycling value and industry profitability.

At present, the company is actively deploying in the field of automobile disassembly and recycling operations. In August 2018, it acquired Beijing Zhongwubo to enter the field of automobile disassembly and operation.

We expect that the company is expected to fully benefit from the dual layout of equipment + operations under the background of increasing industry prosperity, and its performance is expected to continue to grow rapidly.

During the period, the expense ratio decreased, and the improvement of operating quality continued to improve.

The company’s 2019Q1 gross profit margin and net profit margin were 19 respectively.

91%, 7.

96%, there was a slight fluctuation. We judge that it is mainly due to increased market competition and the impact of rising raw material prices.

The total expense 青岛夜网 ratio during the company’s 2019Q1 period was 11.

41%, down 2 every year.

65pct; sales / management / R & D / financial rates are 3 respectively.

36% / 4.

49% / 3.

38% / 0.18%, down 1 from the previous month.

65/0.

96/0.

03/0.

01 pct, highlighting the company’s good cost management capabilities.

The company’s operating cash flow in 2018 was 0.

46 ppm, which turned positive from the previous month. Operating cash flow in Q1 2019 was -0.

08 trillion, mainly due to the increase in the volume of scrap steel business. The company’s stock preparation in advance to ensure output, long boots led to an increase in procurement business volume.

At the same time, the company suffered an asset impairment loss of 206 in Q1 2019.

430,000 yuan, mainly due to the increase in accounts receivable caused by the corresponding increase in bad debt provisions, and gradually improved gradually.

The boom of the elevator industry has improved, and the company’s industrial chain extension is expected to benefit.

On March 5, 2019, Premier Li Keqiang of the State Council proposed to vigorously renovate old urban areas and support the installation of elevators in urban areas.

In 2018, the elevator output reached 71.

90,000 units, an increase of 5 in ten years.

9%.

According to Chinese business data, the annual lift output in 2019 will exceed 800,000 units, reaching at least 10%.

The company’s main business includes elevator signal systems, door systems and other elevator components. Customers include international elevator giants such as Schindler and KONE.

In 2017, the company acquired Suzhou Nylon’s layout of elevator safety components. Nylon promised that its net profit in 2017, 2018, and 2019 will be no less than 3, 3, and 5 million yuan.Long achieved net profit of 354 in 2018.

610,000 yuan and fulfilled performance commitments, and continued growth is expected.

Investment suggestion: We expect the company’s net profit growth rate from 2019 to 2021 to be 28.

8%, 42.

4%, 23.

2%, outstanding growth; given Buy-A investment rating, 6-month target price is 13.

11 yuan, equivalent to 23 times the dynamic price-earnings ratio in 2019.

Risk warning: industry demand declines, industry competition intensifies, and raw material prices rise.

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