Shanghai Electromechanical (600835): Focusing on elevator reconstruction and maintaining steady progress
The company announced 2018 performance: operating income of 21.2 billion yuan, an increase of 9 every year.
05%, net profit attributable to mother 12.
6.8 billion, a decline of 8 per year.
76%, deducted non-net profit attributable to the mother 12.
4.0 billion, down 5 previously.
The company is actively deploying elevator renovation projects and benefiting from the improvement of its business structure. It is expected that the net profit attributable to mothers will rise to 13 in 19/20.
2 billion, 15.
100 million, corresponding to 19/20 PE of 14.
4 times, 12.
5 times, maintaining the level of “Careful Recommendation-A”.
Income rose by 9.
1% and net profit attributable to mothers fell by 8.
There are four preliminary 8%: (1) the downstream demand is weak, and the company’s gross profit margin has decreased significantly.
The elevator industry has entered a mature period, with a complete range of products, falling prices year by year, and excess capacity, especially the homogeneity of low-end and low-end products, while the downturn in real estate has led to excess capacity in the elevator industry.”” Significantly cut corporate profits.
In 18 years, the company’s overall business gross profit margin declined3.
(2) Operating costs have increased significantly.
18.1 billion in 18 years, an increase of 12 every year.
8%, 60% of the cost of the elevator comes from steel, 15% comes from the rare earth, and the 18-year average price increase cycle has greatly compressed industry profits, and the gross profit margin of the elevator business fell by 2.
9% to 19%, breaking below 20% for the first time.
The 18-year inventory book balance is 90.
600 million, rating increased by 2 in 17 years.
3 billion, mainly due to the increase in raw materials and work in progress, the company’s inventory impairment risk is relatively small. Due to the industry characteristics of generally receiving 30% of the advance payment, advance receipts have covered the relevant risks.
(3) The three fees have not changed much, but the increase in asset impairment losses has increased.
Asset impairment losses increase by 17 each year.
3.4 billion, including bad debt provision for bills receivables and accounts receivable3.
2.8 billion, inventory depreciation provision and contract performance cost impairment provision increased by 412 million, goodwill impairment provision has been accrued of about 20 million, and Shanghai Ziguang has good operating quality and no impairment risk (about 12.5 million), can be consideredThe company has no goodwill risk.
(4) Investment income and non-recurring income.
18 years investment income of associates1.
3.8 billion ranked 17 years 1.
4.1 billion decreased, while non-recurring gains were 64 million, compared with 17 years1.
100 billion drop.
46 million in gains on disposal of financial assets on sale in 2017 (mainly equity classes such as stocks), due to changes in accounting measurement, were transferred to other non-current financial asset items, and the fair value changes in 2018 resulted in a decrease of 9 million.
Net operating cash flow has decreased significantly, but without any cash flow risk.
Net cash flow from operating activities 1.
8.8 billion, down 90% before, basically there are three: First, customers have poor cash flow and are more inclined to pay in the form of accounts receivable or bills. Due to the impact of operating receivables, cash expenditure is reduced by about 1 billion every year;(2) The increase in the purchase amount of raw materials, spare parts and other stocks; (3) There was a 40 million guarantee letter of credit for the recovery guarantee in 17 years, which has a high base effect.
The current company’s currency funds are 13.2 billion, and bank deposits that can be used to pay at any time are 7.5 billion. At least the cash flow in the next few years will not become a puppet for company development. Bills receivables and accounts are growing rapidly, but the risks are small.
Accounts receivable 22.
800 million plus notes receivable13.
200 million, notes and accounts receivable totaling 3.6 billion, plus contract assets5.
600 million total 41.
600 million, 31 years each year.
300 million increased by 33%.
From the perspective of the bill structure, accounts receivable bills decreased by nearly 500 million within one year, and increased by nearly 4 billion over one year, accrued for bad debts3.
The 2.8 billion was mainly due to the adjustment of the account structure. There was no large-scale default. The company has always been cautious about accruing bad debts, and transferred back 200 million bad debt provisions in 18 years.
The company proactively controls the quality of accounts when the downstream industry is in a downturn, including reducing cooperation with customers with poor credit, and receivables that are potentially risk-resolved, rather than accounts at risk value.10%, the quality of receivables was significantly included in the industry average.
In terms of different segments, the elevator business has an operating income of 200 billion yuan, accounting for more than 94%. Other businesses include printing and packaging, hydraulic machinery, welding materials, energy engineering and other businesses, and the average operating income has increased.
The main business of elevators has steadily increased: The main business of elevators is Shanghai Mitsubishi Elevator (52% of shares), with operating income of 20 billion yuan, an increase of 8 in the same period in 2017.
35%, gross margin 19% (down 2).
8pct), net profit 17.
Shanghai Mitsubishi has a total investment of 2 billion US dollars, and currently has more than 2,000 employees. It has gradually manufactured and sold more than 800,000 elevators. In 18 years, elevator sales have reached 80,000 (including some Mitsubishi Electric), which has continued to increase.
At present, self-developed products have accounted for more than 70% of the total sales.
The core components of the drive, control system, and traction device are all manufactured independently.
The company’s elevator products cover almost all categories, but especially high-speed elevators are still mainly Mitsubishi in Japan, Shanghai Mitsubishi is mainly low-medium speed, including some high-speed elevators.
The main customers include Evergrande, China Shipping, Greenland, Country Garden, Longhu, Forte, etc. The company fully understands the maintenance and development of strategic major customer relationships, and strengthens investment in core major projects in second- and third-tier cities.Major projects such as the renovation of the auditorium and the new office building, and vertical elevators on Shanghai Line 14.
The main drivers of the company’s performance in the next few years include: (1) Optimization of revenue structure and improvement in gross profit margin.
The company is gradually increasing the proportion of installation and maintenance services. At present, services account for US $ 6 billion in elevator revenue, which has exceeded 30% but it will take some time to reach 50%.
50% of the service income is the installation income, and the other 50% is the maintenance and renovation services. The future increase of the elevator sector will mainly come from the improvement of services, especially the maintenance and renovation services.
The proportion of service income in 19 years will be higher and is expected to reach 35% -40%.
The gross profit margin of the renovation is relatively high (over 30%), and the gross profit margin of installation services and elevator products is about 20%. The gradual increase of the proportion of the renovation services will significantly increase the gross profit margin of the elevator sector.
The gradual replacement of third-party services by the company’s self-maintenance is a general trend. At present, most of the newly installed elevators are self-maintained by the company.
The company has also successfully established a full coverage three-dimensional marketing service network. By the end of 2018, 86 direct labor divisions across the country will be established to gradually cover services such as product installation, maintenance, repair and transformation, and sales of spare parts and accessories to provinces and cities.360 Defense Maintenance Service Network.
(2) The elevator renovation project will be the company’s main development direction.
Retrofitting old ladders with a long service life requires the need to retrofit elevators or renovate the decoration function. Old-fashioned buildings are affected by the aging population and have also created a market demand for retrofitting elevators.
In 18 years, the company has transformed 2000-3000 elevators, and deployed more than 10 one-stop service centers for this business in the country. The development will accelerate in the future.
In addition, the Ministry of Housing and Urban-Rural Development has recently released the “Residential Project Specifications” (draft for comments), which stipulates that residential buildings with 4 or more floors (existing elevators generally installed with 6 or more floors), or the design of the residential entrance floor distance from the building designElevators should be installed in newly built residential buildings with a ground height exceeding 9m, which will also release a certain demand.
(3) The 18-year update cycle has begun, and it is expected to reach a peak in 2021.
The life of the elevator is generally 10-15 years. The last wave of sales peaked in 06-07 and the highest peak was in 14-15. The current update tide has begun. It has a certain hedging effect on the decline in sales in actual terms.The number of elevators in use each year exceeds 6 million units. In recent years, the number of elevators supplemented and reconstructed each year has remained at about 500,000 units, reaching a peak of renewal around 2021.
(4) The growth rate of real estate completed area is expected to usher in an inflection point.
Although the area completed in January-February did not pick up significantly, from the perspective of trends, the turning point at the bottom of completion may have appeared before, and it is currently in a state of turbulence. New construction is often about 3 years ahead of completion, corresponding to the new construction rebound in 2016, 2019Whether the annual completion of the project is absolute or exceeds the growth rate, it is expected to bottom out.
More than 18 years have passed since the completion of the overcapacity clearance, and the elevator price has stopped the downward trend.
Absolutely independent brands are developing rapidly, but foreign brands are still continuing to expand. In the future, some elevator industries will continue to maintain a sustainable situation, but the vicious competition is unsustainable. More than 200 SMEs have been eliminated in 18 years.It will develop towards the integration trend of “big companies”, and the price 重庆耍耍网 may fall further, but it is now close to the “bottom line” of the industry. In 19/20, it tried to stabilize and rebound slightly.
In-depth understanding of the overall state of the industry, the company’s orders have improved, but there has been no explosive growth, and prices have stopped the downward trend.
In addition to the elevator main business, other businesses also maintained positive growth: (1) Revenue from printing and packaging business in 18 years.500 million, an annual increase of 45%, and a gross profit margin of 17.
3% (down 4.
At present, the main operating body is Gauss China. The company holds 60% of its shares and has revenue of 2 in 2018.
3.5 billion, net profit 13 million.
Except for Gauss China, the printing and packaging related operating companies have been separated, the printing plate has almost completely withdrawn, and the company is relatively healthy in light loading.
(2) Hydraulic machinery business income was 200 million yuan, a year-on-year increase of 53%, and gross profit margin was 13% (up 8).
5pct), mainly benefiting from the popularity of construction machinery this year.
The owner is Electro-Hydraulic and Pneumatics (100% of the shares), with a net profit of 71 million in 18 years.
Hydraulic and pneumatic are actively extending to the industrial ecological chain. Under the trend of the electronic control complete set industry, it is seeking the upgrade of intelligent manufacturing.
(3) Welding materials business income 2.
25 ppm, 13% per year, the main body is Smick welding consumables (67% of shares), gross profit margin is 16% (up 1)
The 19-year outlook continues to grow steadily.
(4) Revenue from energy engineering business 1.
9.5 billion, a ten-year growth of 7.
6%, gross profit margin 9.
6% (down 0.
19pct), the main body is Electric Carrier Energy Engineering, revenue 1.
9.5 billion, with a net profit of 3.1 million.
The new Carrier air-conditioning plant has been put into use for 18 years. In the light business field, the maintenance field and the modular machine field, it has increased its expansion efforts and further expanded its scale. It is expected to continue to grow in 19 years.
Growth potential of affiliated companies that include investment income: Nabo Precision has completed the expansion of 200,000 units in 18 years, and will make good use of the Nabo drive sales platform to further expand its market share. Japan ‘s Nabo global share accounts for over 60%At present, 90% of the domestic market is used as joints for industrial robots. In 19 years, it will actively expand its application in new fields such as machine tools and solar thermal power generation; ABB Motors will try to cooperate with high-voltage and low-voltage motors to face the market in 19 years to enhance competitiveness; Every year, UFIDA Jietong established corresponding factories through matching with OEMs, thereby realizing the optimization of product geographical layout and the replacement product structure of new products such as brushless motors; Jintai Engineering relies on Liugong’s scale in the construction machinery industry.Increase collaboration with Liugong and share resources.
Maintain the level of “prudent recommendation”.
In the medium to long term, the real estate market will continue to grow steadily with the advancement of urbanization, and the growth in demand for public transport facilities investment and old ladder renewal, as well as the strategic transformation of elevator companies’ services, will provide new opportunities as the elevator industry accelerates.power.
The company’s revenue is mainly affected by the development of Shanghai Mitsubishi Elevator products. At present, the company has reached a contract but has not yet fulfilled the revenue of 25.1 billion, of which 18 billion is expected to be confirmed in 19 years.
It is expected that the company’s revenue in 19 years will increase slightly to about 21.4 billion.
Benefiting from the improvement of the elevator business structure, the gross profit margin is expected to bottom out and gradually reduce gears to be put into production. Nabo Precision Machinery is expected to continue to increase volume, while benefiting from the continued popularity of construction machinery and hydraulic machinery business and Jintai Engineering will continue to grow at a high rate. Investment income in 19 years is expected to increase.Significant improvement, net profit attributable to mothers is expected to rise to 13 in 19/20.
2 billion, 15.
100 million, corresponding to 19/20 PE of 14.
4 times, 12.
5 times, maintain prudent recommendation rating.
Risk reminder: prices fall too fast, real estate investment grows faster than expected, and raw material prices change