Weixing (002003) 2018 Annual Report Comments: Order Adjustments, Revenue Growth, Gross Margin Decline and Changes in Military Business Impact on Profits
In 2018, the company suffered from customer order adjustments, changes in product structure and changes in military products business, which affected net profit.
In 2019, with the recovery of demand, active 杭州桑拿网 adjustment may bring recovery and growth.
Taken into consideration, we lower the EPS forecast for 2019/2020 to zero.
59 yuan to maintain the “overweight” level.
Revenue / net profit increased by 3 in 2018.
The company’s 2018 revenue / net profit was 27.
12 ppm / 3.
1 billion, an increase of 3 each year.
32% / digit 14.
89%, earnings per share are 0.
41 yuan, the current dividend yield is 4.
In the fourth quarter of 2018, the company’s revenue / net profit was subdivided into 6.
29% / 90.
76%, H & M and Turkish customer order substitution is the top priority.
From a profit perspective, the company’s gross profit margin declined in 20182.
07PCTs to 40.
57%, mainly due to the decrease in the gross profit margin of the zipper business, and the management / sales / financial expense ratio increased by 0.
91 / -0.
29PCT to 9.
24% / 9.
95% / 0.
26%, the decrease in financial expenses was mainly due to exchange gains of 4.86 million (a decrease of 1021 million in the same period last year).
In addition, the military product business gradually led to more goodwill impairment losses of 23.53 million yuan.
The overall leadership of the company’s net profit in 2018 decreased by 3.
52PCT to 12.
The adjustment of international business orders dragged down the main business of excipients, and the domestic business was relatively stable.
(1) The main business of excipients is divided into regions, and the international business is 0 every so often.
51%, mainly for H & M and Turkish customer order adjustment, domestic business increased by 9%.
07%, the stability reflected when the downstream demand is flat.
(2) In terms of categories, the button business increased by 8 in 2018.
64%, of which sales increased by 2.
04% to 75.8.9 billion tablets, unit price increased by 6.
5%, gross margin increased by 1 in the short term.
12PCT to 42.
62%; revenue from zipper business increased by 4 in 2018.
63%, of which sales increased by 0.
84% to 3.
6.3 billion meters, with a unit price increase of 3.
8%, gross margin decreased by 3.
87PCT to 37.
58%, the decline was mainly due to: ① the increase in the price of raw materials; ② the change in product structure and the popularity of sports caused negative growth in metal zipper demand, and plastic steel zipper grew faster.
The gradual fluctuation of military orders led to the adjustment of orders, and at the same time accrued some goodwill impairment.
In 2018, the revenue from satellite navigation business decreased by 40 each year.
32% to 1.
1.5 billion, accounting for 4.
24%, the first is that Beidou satellite system is in the process of second-generation to third-generation technology upgrade, overlapping military reform and industry-induced factors, the Beidou navigation business orders decreased.
At the same time, the increase in income and profits of the military products business caused the company to accrue impairment losses on goodwill of 23.53 million yuan.
We estimate that the net profit of the company’s military products business in 2018 will be about 30 million to 40 million.
Looking forward to 2019, the product structure will be actively adjusted, costs and expenses will be effectively controlled, and gross profit will try to stabilize and improve. With the increase in revenue & decrease in goodwill impairment, it is expected to bring some profit elasticity.
As of now, the company’s orders have achieved steady growth at least in 2019, but the growth rate of customer order adjustment has fallen slightly in the past 3 months (but the proofing indicators are still growing rapidly and customer demand is still better).
Initially, it is expected that the zipper and button business is still expected to achieve double-digit growth, the military product business is expected to stabilize, and the overall guaranteed revenue will achieve 10% + growth.
At the same time, the company’s zipper business actively responded to changes in industry demand to carry out category structure adjustments. It is expected that the gross profit margin is expected to stabilize or even improve. Gradually, operating profit and net profit will bring some flexibility, and the growth rate is higher than revenue growth.
In terms of production capacity, the first phase of Bangladesh’s production capacity layout was completed in Q2 2018, and it will be completed in 2020.
Price fluctuations of raw materials; 2.
RMB exchange rate; 3.
Expansion of foreign capacity did not meet expectations.
Profit forecast and estimation.
The company is the largest button 四川耍耍网 manufacturer in China. In 2018, it was affected by customer order adjustments, changes in product structure and changes in military products.
In 2019, with the recovery of demand, active adjustment may bring recovery and growth.
Based on changes in industry demand and potential risks, the EPS forecast for 2019/2020 is reduced to zero.
59 yuan (the original EPS was 0.
64 yuan), new forecast for 2021 is 0.
68 yuan, maintain “overweight” rating.