Sunway (603333): Performance in line with expectations and continued recovery of operations
Investment Highlights The company released the third quarter of 2019 report: the first three quarters achieved revenue14.
230,000 yuan, a year-on-year increase of +29.
01%; net profit attributable to mother is 0.
950,000 yuan, an increase of +83.
22%; budget benefit is 0.
18 yuan, +81 year-on-year.
82%; gross margin is 21.
20%, a year-on-year increase of +2.
51pct; net 重庆耍耍网 interest rate is 6.
54%, a year-on-year increase of +1.
In the third and third quarters alone: revenue of 5.
1.5 billion, +18 a year.
79%; net profit attributable to mother is 0.
3.2 billion, +27 a year.
49%, compared to -26.
87%; gross margin is 21.
47%, a year-on-year increase of +0.
46 points; net margin is 5.
99%, a year-on-year increase of +0.
Overall in line with market expectations.
Significant performance recovery, gross margin and net profit continued to recover.
Since 2018, the company’s revenue has returned to high growth, and its performance has turned into a profit. The company’s revenue and performance have continued to grow rapidly in the first three quarters of 2019, with corresponding growth rates of 29.
01% / 83.
22%, continued to maintain a strong recovery momentum.
In the first three quarters of 2019, the company’s gross profit margin was extended and increased2.
51pct to 21.
20%, net margin increased by 1.
85pct to 6.
54%, profitability has significantly recovered to 2013 levels.
Many points in the downstream field have blossomed. Since the third quarter, the amount of bids has exceeded 600 million.
Since the third quarter, the company has continued to win large contracts: on July 23, the company announced that it had won 7 projects including “Baihetan Hydropower Station”, with a total bid amount of 2.
2.3 billion; On August 28, the company issued an announcement and won 7 bids for “Hefei Rail Transit Line 4/5 Electromechanical” and other 7 projects, with a total bid amount of 2.
11 trillion; On October 18, the company announced that it had won 7 projects including the “China Guangdong Nuclear Power Industrial Long’an 51MW Wind Farm Cable Project”, and the total bid amount was 2.
10 ppm; the three bids announced above accounted for 14.4 years of revenue in 2018.
17% / 13.
43% / 13.
33%, totaling 40.
93%, the project covers nuclear power, construction, rail transit, steel and other fields.
The company’s competitive advantage in traditional areas such as metallurgy has been steadily solidified. It has gradually established a leadership position in the nuclear power field and has continued to expand its business share in emerging areas such as rail transit. It has blossomed in various downstream areas and highlighted its core competitiveness.
The drop in copper prices has brought about a gap in gross profit margins, and the UHV cycle has released a growth driver.
Copper accounts for about 80% of the cost of wire and cable. Copper prices have been on the decline since 2018. The company’s single quarter gross margin has continued to increase month-on-month and has shown significant scissors; by October 2019, copper prices have continued to decline slightly month-on-month, and the company’s gross profit margin is expectedFurther improvement.
In September 2018, the Energy Bureau proposed to accelerate the construction of 9 key transmission and transformation projects, covering 12 UHV construction projects. As of the end of September 2019, 2 lines, 2 lines, and 4 lines have been approved, and 4 lines, 2 lines, and 6 lines remain.Waiting to start.
The company continues to focus on breakthroughs in the ultra-high-voltage cable market and will benefit from the increased demand for the cable industry brought by the new round of UHV construction cycles.
Investment suggestion: The company is a leading domestic manufacturer of special power cables. It has obvious advantages in high-end markets such as nuclear power and rail transit, and actively deploys emerging areas such as high-voltage cables and electric vehicle charging cables.
We expect the company’s net profit for 2019-2021 to be 1.
3.6 billion yuan, EPS is 0.
45 yuan, corresponding to the closing price of PE on October 21, 2019 were 47.
9 times, maintaining the overweight rating.
Risk reminder: Macro economy is less than expected risk, market competition intensifies risk, raw material price rise