04/07/2020

China Metallurgical (601618) 2019 Third Quarterly Report Review: Faster Revenue Growth, Costs, Expenses and Impairment Accrual Slow Profit Performance

China Metallurgical (601618) 2019 Third Quarterly Report Review: Faster Revenue Growth, Costs, Expenses and Impairment Accrual Slow Profit Performance

The company’s Q3 revenue maintained rapid growth, and the increase in cost and increase in impairment provision dragged down profit performance.

Orders increased steadily, and housing construction and metallurgical orders maintained rapid growth.

Considering the moderate recovery of infrastructure and abundant orders in hand, we maintain EPS forecast for 2019-21 of 0.

30/0.

33/0.

35 yuan, the corresponding PE is 9 respectively.

2/8.

4/7.

9x, maintain “Buy” rating.

2019Q1-Q3 revenue quarter +25.

9%, net profit attributable to mother +10 for ten years.

2%, revenue maintained a rapid growth, increased costs and increased impairment provision dragged down profit performance.

The company’s revenue in the first three quarters of 2019 was 2,280.

80,000 yuan (ten years +25.

9%), net profit attributable to mother 40.

300 million (+7.

2%), the growth rate of profit is lower than the growth rate of income is mainly due to the increase in costs and expenses and the company’s significant increase in impairment.

By quarter, Q3 achieved revenue of 690.

7 trillion, +25 a year.

4%, net profit attributable to mother 8.

8 ‰, +2 for ten years.

3%.

The company plans to generate 3,050 trillion in revenue in 2019, completing 74 in the first three quarters.

8%.

The gross profit margin decreased slightly, and the increase in R & D expenditure led to an increase in the expense ratio, and the provision for impairment increased significantly.

The company’s consolidated gross profit margin for the first three quarters of 2019 is 12.

0%, one year -0.

3 points.

The company’s comprehensive expense ratio is 6.

8% +0 per year.

1pct, of which sales / management / R & D / financial expense ratio is 0.

6% / 2.

6% / 2.

6% / 1.

0%, about -0.

1 / -0.

4 / + 0.

9 / -0.3pct,杭州桑拿网 R & D expenses increased by 93% compared to the same period last year.

Q1-Q3 company accrued credit impairment losses32.

500 million, previously + 73%.

Net operating cash replacement 106.

30,000 yuan (net decrease of 73 in the same period last year.

100 million); net reduction in investment cash by 51.

9 trillion (net decrease of 95 in the same period last year.

100 million); net cash inflow from financing 88.

60,000 yuan (net inflow of 110 in the same period last year.

900 million).

Q3 orders increased steadily, and housing construction and metallurgical orders maintained rapid growth.

In the first three quarters of 2019, the company signed 5,347 trillion new contracts, which is +18 in ten years.

8%; 183 of which were newly signed overseas.

500 million, +5 in ten years.

6%, mainly for newly signed Vietnam waste incineration power plant projects (19.

700 million), Indonesia OBI nickel-cobalt project (12.

600 million), Indonesia’s new Asian steel rolling project (10.

800 million).

In the new millennium, 5,083 trillion new contracts were signed for single-China projects, and +20 for ten years.

1%; Among the projects above 50 million, housing construction, transportation infrastructure, and metallurgical projects were newly signed at 25558/880/76 billion yuan (+36% /-21% / + 43%).Fast growth.
Metallurgical engineering grasps the displacement of technological transformation and relocation, and comprehensively deploys new infrastructure areas such as pipe corridors, theme parks, and water treatment.

In traditional metallurgical engineering business, the company grasps changes in production capacity replacement, steel plant relocation, and industrial upgrading, and gradually the metallurgical order is expected to maintain a better situation; the company’s overall layout of new infrastructure, in the corridor / theme park / industrial environmental protection / waterGovernance / characteristic small towns and other areas; the company is in the leading position in the pipe gallery market. On July 30, the company won the first bid for the infrastructure in Xiong’an New District. The project includes pipe gallery, road, wire mesh and other engineering construction.

Risk factors: non-ferrous metal prices fluctuate; real estate, infrastructure investment falls short of expectations; business conversions fall short of expectations.

Investment suggestion: The company’s Q3 revenue will maintain rapid growth, and the increase in costs and accruals will drag down profit performance.

Orders increased steadily, and housing construction and metallurgical orders maintained rapid growth.
Considering the moderate recovery of infrastructure and abundant orders in hand, we maintain EPS forecast for 2019-21 of 0.

30/0.

33/0.

35 yuan, the corresponding PE is 9 respectively.

2/8.

4/7.

9x, maintain “Buy” rating.