Chint Electric (601877): Steady growth in performance; low-voltage segment expected to accelerate in second half

Chint Electric (601877): Steady growth in performance; low-voltage segment expected to accelerate in second half

Event: The company released its 2019 Interim Report, which reported a revenue of 144.

2.8 billion, an increase of 21 a year.

22%; net profit attributable to mother 17.

8.4 billion, an increase of 0 in ten years.

08%, it is expected that the transfer of power stations will increase by 19 per year.

35%, EPS is 0.

83 yuan.

The growth momentum of the low-voltage electrical appliance business maintained its leading position in the industry.

According to our industry research, subdivided by trade friction and grid investment growth (-19.

3%), the overall growth rate of the domestic low-voltage industry in 19H1 was 5-7%.

The company’s low-voltage electrical appliance business revenue in 19H1 was about 8.8 billion, a growth rate of about 10%, which was nearly twice the overall growth rate.

In terms of domestic market development: The company has 510 core dealers through product power enhancement, refined management, fair incentives, etc., and 4000 terminal terminals are fully empowered and enhanced. At the same time, the company has locked 6 major industries to focus on expanding the industrial market and large terminal customers.During the reporting period, the industry’s direct sales have achieved remarkable results. Orders from strategic major customers increased by 170% + in half a year, communications orders increased by 50% +, and the control of power bureaus increased construction orders by 30% +.

In terms of overseas market development: The company continues to promote the “global localization” strategy, covering the main target markets with its subsidiary Singapore Sunshine and the Egyptian joint venture factory Chint-EGEMAC as the fulcrum. It has reported and successively won the drainage of Russian oil mining companies and the desalination of Bahrain.Typical projects such as meter boxes in Iraq, SUNWAH PEARL in Vietnam, and energy storage in South Korea.

In the first half of 2019, the growth rates of the company’s distribution, direct sales and overseas are expected to be about 8%, 30% and 15% respectively. From the perspective of industry trends and the company’s gradual change, it is expected that the growth rates of various industry forms will be significantly improved in the second half of the year.
The photovoltaic new energy business maintained steady growth.

19H1’s new energy business achieved revenue of US $ 5.6 billion, a year-on-year increase of 46.

7%, with net profit growth exceeding 23%.

On the manufacturing side, the company’s component capacity is 3.

2GW, budget is about 1.

8GW, with annual growth and growth; in the second half of the year, the domestic boom in installed capacity + overseas traditional installed capacity peaked during the boom season, and the company’s component business continued to maintain rapid growth.

In terms of EPC business, in July 2019, the National Energy Administration cleared bidding items22.

At 8GW, the company’s EPC won the bid of 651MW, and construction will start in the near future. At the same time, overseas EPCs in the Netherlands, South Korea, and Vietnam have begun in 19H1, and the second half of the year will enter the stage of grid connection to confirm revenue.

In terms of power plant operation, the company is operating a power plant 2.

7GW, where centralized and decentralized are 1 respectively.

15GW and 1.

57GW, the proportion of distributed power stations increased from 42% to 58% in 2018H1, and the quality of operating generators has been significantly optimized.

In terms of household power stations, the company has a clear brand advantage and can share low-voltage distribution channel resources. In 19H1, the number of household installations was increased by 343MW.

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Profitability continues to improve, and ROE levels are expected to rise steadily.

The company has a stable business. Since the listing in 2010, the compound revenue and net profit length have reached 20% and 23 respectively.

3%.

Strong channels + high turnover lead to major financial indicators such as the company’s turnover days, cash flow, asset-liability ratio, etc., which are higher than those of its peers, and the profit quality is excellent.

In the first half of 2019, the company’s overall gross profit margin was 28.

12%, an increase of 1 from the previous quarter.

23Pcts, of which the gross profit margin of low-voltage appliances increased by 1-2Pcts; cash revenue ratio reached 97%, and operating cash flow was 9.

9 trillion, the asset-liability ratio remained basically stable at 56%.

As the company’s profitability continues to rise, the photovoltaic plant’s asset quality optimization and overall operating efficiency increase, the company’s ROE level in 2018 reached 16.

59%, an increase of 2 a year.

38pcts, starting the upward turning point trend, is expected to return to more than 20% in the future. Investment suggestion: Maintain the company’s Buy-A rating and target price of 30.

00 yuan.

The company’s revenue growth rate is expected to be 12 in 2019-2021.

3%, 14.

0%, 15.

6%; net profit is 42.

2/49.

8/57.

9 trillion, a growth rate of 17.

5% / 18.

2% / 16.

0%, corresponding to EPS is 1.

96/2.

32/2.

69 yuan.

Maintain the company’s Buy-A rating and 6-month target price of 30.

00 yuan, the target price corresponds to the dynamic estimate of 15x in 2019.

Risk warning: macroeconomic downside risks, rising prices of upstream raw materials, expansion of overseas business beyond expectations, rising photovoltaic module prices, etc.