Xu Ji Electric (000400): Management improvement promotes contrarian growth in operating performance
Event: Recently, the company released the 2019 annual report performance forecast, and it is estimated that the net profit attributable to the mother will be 3.90-4.40 400 million, an increase of 95 in ten years.33% -120.37%, EPS per share is 0.39 yuan-0.44 yuan.The company’s 2019 performance has shown significant growth potential, mainly because: 1) business development has blossomed and the company’s operating income has grown rapidly; 2) management optimization and comprehensive gross profit margin have steadily increased. Operation and management continued to improve, maintaining a steady growth against the trend.On January 11, 2019, the whole country’s electricity consumption6.5 trillion degrees, an increase of 4 in ten years.5%, the growth rate fell in two years 4.4 points; $ 4,116 trillion, a drop of 8 above.8%.Under the unfavorable background of the industry, the company’s integrated scale management improvement measures have been effectively resolved, and its operating performance has maintained a counter-trend growth.In the first three quarters of 2019, the company’s revenue and profit maximization were maintained at 25 respectively.93% and 58.35% growth, gross margin and net margin were 18 respectively.79% and 5.91%, an increase of 0 over the same period last year.98Pct and 1.14.The high performance forecast for 2019 results further reflects the company’s overall management and good management improvement. With sufficient orders in hand, the DC business will continue to contribute in 2020.The company has mastered the core technology of DC transmission converter valves with a voltage level of ± 1100kV and below, and has formed a complete set of DC transmission equipment that integrates current conversion, control and protection and DC field.In February 2019, Qinghai-Henan ± 800kV and Northern Shaanxi-Hubei ± 800k two special direct lines were invited for tender. The company won the bid for the converter valve7.34 ppm, DC controlled protection system1.USD 9.3 billion, with bid winning shares of 24% and 49%, respectively.In addition to the Kunliulong, Zhangbei and Lahore lines, the company has nearly 4 billion UHV orders in hand. From the perspective of the construction of the tendered lines, the company’s DC transmission system business is expected to contribute significantly in 2020.In addition, two ± 1000kV UHVDC projects in Baihetan-Zhejiang and Baihetan-Jiangsu are also expected to be approved for tender in 2020. The off-line market has successively made multiple breakthroughs.In the domestic market, 1) Focus on promoting the establishment of large unicorn customers such as Huaneng, Guodian Investment, Guoneng Investment, China Resources, Three Gorges Group, and China Mobile; 2) Accelerate the development of new products and new business markets. Independent research and development by the company in 2018Products such as 35kV inflatable switchgear and 35kV subway large-area optical fiber longitudinal differential protection successfully won the bid for Hangzhou Metro; in 2019, the auxiliary monitoring system achieved the first set of operation on Hohhot Metro Line 1.In the international market, the company takes the power distribution business as a breakthrough and accelerates localized operation.In 2018, the company’s electricity meter business achieved its first breakthrough in Thailand, Bangladesh, and Russia. The substation business newly signed Uganda substations, Laos substations and other projects. Focus on the ubiquitous electric power Internet of Things, and fully support the construction of the “three types and two networks” of the State Grid Corporation of China.As a leading domestic grid information and intelligent integrated solution service provider, the company has undertaken multi-station integration, new smart terminal R & D and application, energy Internet ecosystem construction, and State Grid Core and other diversified key construction projects.At the same time, the company leveraged its advantages in the field of substation integrated automation and 天津夜网 relay protection, and actively deployed new businesses such as substation intelligent fire protection and line inspection.In addition, the company has also strengthened cooperation with research institutes.In the first half of 2019, the company and China Academy of Electric Power launched product technology achievement cooperation, signed a strategic cooperation agreement with ZTE, and strengthened joint research on key technologies such as ubiquitous electric power Internet of Things and 5G. Investment recommendation: Maintain the investment rating of Buy-A, with a 6-month target price of 15.00 yuan.We expect the company’s attributable net profit for 2019-2021 to be 4 respectively.01, 7.55, 9.43 trillion, EPS is 0.40, 0.75, 0.94 yuan.Maintain BUY-A investment rating with 6-month target price of 15.00 yuan. Risk reminders: 1) Delay in project approval or intensified competition in the industry; 2) Increase in prices of bulk raw materials; 3) Delay in order delivery or decrease in gross profit margin.report