China Heavy Industry 厦门夜网(601989): Pay attention to the progress of construction of military ships and high value-added ships and look forward to the improvement of profit quality
2018 results are worse than expected The company’s 2018 results announced: revenue of 44.5 billion yuan, YoY + 14.
72% (after adjustment, the same below); net profit attributable to mother 6.
7 ppm, YoY-19.
68%; net profit after deduction is -1.
7 trillion, expected to narrow; performance exceeded expectations, mainly due to lower gross profit margins and asset impairment losses exceeded expectations.
The company announced 1Q19 results: revenue 60.
6.5 billion, YoY-0.
82%; net profit attributable to mother 5.
300 million, YoY + 92.
9%, the annual increase is mainly due to the increase in investment income by 9.
900 million; net profit after deduction is -5.
300 million, YoY-309%.
Revenue increased but gross margin decreased.
The revenue growth in 2018 was 15%, mainly due to the low base last year (the termination of offshore contracts in 2017 to offset the income); the comprehensive gross profit margin was 10%, a decrease of 2 percentage points.
In terms of business: 1) Revenue from marine defense and marine development equipment was 15.9 billion (YoY + 74%), and gross profit margin was 2% (YoY + 4ppt), mainly due to the termination of offshore engineering contracts in the same period last year to offset the reduction of income and costs; 2018The annual new order is 1.07 million yuan (YoY-47%).
2) Marine transportation equipment revenue was 11.1 billion (YoY-14%) and gross profit margin was 15% (YoY-1.
54ppt); 11.8 billion new orders in 2018 (YoY + 16%).
3) Revenue from deep sea equipment and ship repair and modification is 6.3 billion (YoY + 31%), gross margin is 15% (YoY-6ppt); new orders in 2018 are 4 billion (YoY + 18%).
4) Ships supporting equipment and electromechanical equipment revenue of 7.2 billion yuan (YoY-13%), gross profit margin of 10% (YoY-1 ppt); 2018 new orders 12.2 billion yuan (YoY-41%).
5) Military-civilian integration strategy Emerging industry revenue is 3.5 billion (YoY + 5%), and gross profit margin is 19% (basic flat).
As of the end of December 2018, new orders totaled 421 trillion, YoY-26%; handheld orders totaled 124.5 billion yuan, YoY-14%.
The development trend focuses on the military industry, military trade, and the progress of high-value-added ship business. We look forward to the turning point in operating performance.
In 2018, China’s first domestically-made aircraft carrier completed several sea trials, and the new destroyer steadily advanced; the company’s projects for Thailand, Bangladesh and other countries proceeded on schedule; in terms of civilian ships, it actively expanded the construction of high-value-added ships, and high-value-added ships accounted for profittwenty three.
西安耍耍网 We are optimistic about the growth prospects of naval equipment and high value-added ships, and look forward to the turning point in operating performance.
The profit forecast adjusts the forecast of income, gross profit margin, investment income and other items, maintaining the 19-year profit forecast unchanged, and the 2020 net profit forecast of 15.
Estimates and recommendations currently correspond to 19 / 20e 1.
52x P / B.
Maintain the recommendation. Considering the recent upward adjustment of the ship’s estimated hub, the target price is raised by 13% to 6.
75 yuan, corresponding to 19 / 20e1.
78 times P / B, with a potential increase of 17%.
Risk steel price, uncertainty of exchange rate changes; uncertainty of military orders and delivery.