Hengrun (603985)： rapid revenue growth underestimates high-quality targets
Hengrun (603985): rapid revenue growth underestimates high-quality targets
Investment Highlights The company’s revenue continues to grow rapidly.
The company achieved operating income in 201811.
85 ppm, an increase of 60 in ten years.
03%; net profit attributable to mother 1.
25 ppm, an increase of 37 in ten years.
62%; The company achieved revenue in the first quarter of 20192.
64 ppm, an increase of 21 in ten years.
The annual income of wind power tower flanges has greatly increased, and the gross profit margin has increased.
In 2018, the company’s wind power tower revenue reached 5.
900,000 yuan, an increase of 50 years ago.
37%; gross margin is 23.
31%, a decrease of 10 per year.
As a leader in offshore wind power flanges, the company has significantly benefited from the rapid growth of global offshore wind power installations.
However, the price of raw materials is still at a high level, the overall price of fans has fallen, and the increase in employee compensation has caused a significant decline in gross profit margin.
The petrochemical pipeline industry leads the rapid growth of forged flanges.
The company’s forged flanges and other free forgings have revenue of 3.
10,000 yuan, an increase of 67 in ten years.
Among them, the revenue of forged flanges 杭州桑拿 reached 2.
6.8 billion, a previous growth rate of 70.
45%, and gross margin increased by 6.
96 cases reached 26.
From the perspective of industrial applications, the petrochemical pipeline industry has the fastest growth, with revenue of 7206.
530,000 yuan, a surge of 487 in ten years.
Metal pressure vessels and trading companies also have 38.
96% and 22.
92% revenue growth.
The rise of the refining and chemical industry and the supply-side reforms have significantly driven the company’s business.
The ratio of three expenses increased significantly, and the R & D expense ratio increased.
Company selling expenses 5.
19%, exceeding the expected target 3.
91 points; administrative expenses 2.
86%, a reduction of 0 per year.
76 points.Finance costs are -0.
30%, a decrease of 1 per year.
Together, the three expense ratios are significantly reduced by 5.
90pct, which to some extent reduces the impact of rising gross margins.
R & D expenses 3.
93%, increasing by 0 every year.
Acquired 51% equity of Guangke Optoelectronics and cut into the photovoltaic and pan-semiconductor components industry.
The company’s board of directors agreed in September 2018 to 1.
8 billion acquisition of 51% stake in Guangke Optoelectronics.
Guangke Optoelectronics promises that the net profit attributable to mothers and the net profit attributable to non-mothers from 2018 to 2020 shall not be less than 30 million yuan, 35 million yuan and 40 million yuan respectively.
Guangke Optoelectronics’ main technology is machining, which can form a good synergy with the company.
Through the acquisition of Guangke Optoelectronics, the company cut into the field of photovoltaics and pan-semiconductor equipment, opening a huge space for the company’s future development.
Earnings forecast and rating: The company’s offshore wind power flanges have grown rapidly, and the acquisition of Guangke Optoelectronics has opened up new space.
We have adjusted our profit forecast and expect the company’s EPS for 19-21 to be 1.
08 yuan, corresponding to the closing price of PE on June 6 is 11.
5x / 9.
0x / 7.
4x, maintaining the level of “prudent overweight”.
Risk warning: further increase in raw material prices, risks of overseas trade, and risk of goodwill impairment.