Zhejiang Dingli (603338): Expansion of the domestic market accelerates the net margin extension

Zhejiang Dingli (603338): Expansion of the domestic market accelerates the net margin extension

Event: On April 29, 2019, the company released the 2019 first quarter report.

In the first quarter of 2019, the company achieved operating income of 3.

840,000 yuan, at least 23.

44%, net profit attributable to mother is 1.

01 ten percent, +44.

13%, basically the return is 0.

41 yuan, +46 for ten years.

43%.

Gross profit margin 42.

89%, ten years +5.

4pct, net interest rate is 26.

29%, ten years +3.

78pct.

The expansion of the domestic market is accelerating, and the proportion of future revenue will further increase than expected.

The company’s 2018 national income7.

16 ppm, an increase of 84 in ten years.

23%, accounting for 43.

63%; overseas market 9.

25 ppm, an increase of 30 in ten years.

18%, accounting for 56.

37%.

The overseas market is still the big head, and the growth rate of the domestic market is accelerating. In the first quarter of 2019, the company achieved revenue3.

840,000 yuan, at least 23.

44%, we judge that the proportion of domestic and foreign revenue will continue the trend in 2018, the domestic 淡水桑拿网 market is accelerating, gradually the domestic market is becoming more mature, the product penetration rate is increasing, the company strengthens cooperation with large customers such as Far East Horizon, and continues to develop newCustomers, and the first payment ratio is not less than 30%, the domestic market share will continue to increase in the future.

The gross profit margin and net profit margin were significantly increased.

① Increase in gross profit margin by 5.

4pct, will maintain a steady upward trend in the future.

2018Q1 / Q2 / Q3 / Q4 gross profit margins were 37.

49%, 39.

38%, 43.

60%, 44.

52%, gross margin increased significantly quarter by quarter, in Q1 2019, the company’s gross profit margin was 42.

89%, ten years +5.

4pct, we judge that the target is to be affected by the exchange rate in the first quarter of last year, the gross profit margin is low, and the company is reorganized. In July 2018, the company newly launched a small shear fork production line.

In the future, the volume of arm-type products will increase, the proportion will increase, and the product structure will be adjusted. We judge the company’s gross profit margin trend to rise steadily.

② Profitability has increased, and net interest rate has increased significantly.

In Q1 2019, the company’s net margin was 26.

29%, ten years +3.78pct, the company ‘s profitability has increased, and the net interest rate has increased significantly. We judge that it is mainly due to the company’s long production chain and a large space for cost reduction and efficiency improvement.Technical reforms, sales, packaging and transportation, finance, manpower, and other dimensions set out to reduce costs, strengthen internal cost control, and significantly improve profitability.

The fourth phase of the plant is basically completed, waiting for the equipment to be moved in. Arm-type products will become the company’s new profit growth point.

In 2018, the company’s arm sales were 548 units, +98 throughout the year.

55%, revenue from arm-type products2.

07 billion, previously +103.

twenty two%.

Arm-type products have tight production capacity. With the new arm-type products developed by magni, the product performance is better and the failure rate is reduced. Small batch trials will begin at the end of 2018.

The main construction of the fourth phase of the plant has been completed, and it is currently in the final stage of construction and equipment procurement. After commissioning, it can add 3200 units of arm-type capacity per year.

We judge that the company will gradually increase the output release of arm-type products in 2019, the scale effect will appear, and the gross margin will increase in the future. Arm-type products are expected to become the company’s new profit growth point.

Investment suggestion: It is expected that the company’s net profit attributable to its mother in 2019-2021 will be 7 respectively.

08 thousand yuan, 10.

3.8 billion, 14.

160,000 yuan, an increase of 47 in ten years.

34%, 46.

56%, 36.

45%.

The corresponding EPS are 2 respectively.

86, 4.

19 and 5.

72 yuan, the corresponding PE is 26.

94, 18.

38 and 13.

47 times.

Maintain a highly recommended level.

Risk warning: fierce market competition; worsening trade war; the company’s fourth-stage capacity climbing progress is less than expected.

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