Honglu Steel Structure (002541): 3Q19 profit margin rebounded and non-net profit continued to grow rapidly

Honglu Steel Structure (002541): 3Q19 profit margin rebounded and non-net profit continued to grow rapidly
Event: The company announced three quarterly reports for the first three quarters of 19, achieving revenue of 76 in the first three quarters.4 billion, a year-on-year increase of +48.0%, net profit attributable to mother 3.4 billion, a year-on-year increase of +1.6%, net of non-attributed net profit 2.7 billion, a year-on-year increase of +58.1%; single third quarter revenue 28.6 billion, a year-on-year increase of +40.5%, net profit attributable to mother 1.7 billion, a year-on-year increase of -1.5%, net of non-attributed net profit 1.6 billion, a year-on-year increase of +108.6%, deducting non-net profit is basically in line with our expectations. In the third quarter of 19th, revenue continued to increase rapidly, and profitability improved: in the first three quarters of 19, revenue increased by +48.0%, growth rate +0 for ten years.4pct, continued high growth, benefiting from the continuous expansion of steel structure production capacity and full orders in hand.Gross profit margin for the first three quarters of 13.3%, twice -2.8 cases, the decline in gross profit margin narrowed 重庆耍耍网 significantly earlier than 1H19 (1H19 gradually decreased by 5.6pcts), with a gross profit margin of 14 in the third quarter.9%, ten years +1.At 7pcts, the profit margin rebounded significantly in the third quarter, mainly benefiting from the climb of new production capacity and the decline in steel prices. The release of production capacity is sustainable, and the profit margin has room for improvement.Cash flow, asset structure improved, and the effect of scale of production capacity gradually appeared, driving the expense ratio during the first three quarters down by 2%.1 to 6.9%, leading to an increase in operating profit margin in the first three quarters of 0.2 points to 4.7%. The decrease in government subsidies has caused a significant decrease in the net interest rate of mothers and mothers, the asset structure has 天津夜网 continued to improve, and cash flow has maintained a high level: the first three quarters of 19 the company was included in the current profit and loss government subsidies.800 million (1% of revenue.1%), a significant decrease in the earlier period of 18 years (2.100 million, accounting for 4.1%), resulting in a decrease in net profit attributable to mothers in the first three quarters.0 to 4.4%, the impact of subsequent government subsidies on profit will be further reduced.As of the end of 3Q19, the company’s asset-liability ratio and interest-bearing negative ratio were 60.9%, 23.2%, respectively double +4.1, -2.At 9pcts, the increase in debt ratio was due to the increase in advance receipts and the decrease in the proportion of interest-bearing liabilities to further optimize the asset structure.In the first three quarters of 19, the cash-to-cash ratio was 99.7%, 90.1%, the difference between the two is smaller than -3.5% to 9.6%, cash flow maintained at a good level. We are optimistic about the growth of the steel structure industry and maintain the “Buy” rating: The national annual promotion of prefabricated buildings continues to increase in speed. Since this year, the policy has tilted towards steel structures, and has promoted the construction of affordable housing in some areas of the pilot prefabricated steel structure.The structure is rapidly applied; the disadvantage of steel composition will gradually disappear in the long term. We believe that the steel structure assembly construction industry will accelerate and is optimistic about the long-term growth of the industry.Considering that the government subsidy contribution is lower than our expectation, we lower the company’s net profit forecast for the company from 19-21 to 45/5.2/6.200 million (previous value was 5.4/6.0/6.800 million), the net profit attributable to mothers after the cancellation of government subsidies was 3.8/4.7/5.800 million, the current price corresponds to PE (supplementary subsidies) 11x / 9x / 7x, maintain “Buy” rating. Risk warning: policy promotion / capacity expansion / government subsidy exceeds expectations, steel prices change sharply