Performance in line with expectations, customized product line highlights high growth April 18, 2018 00:00 Soochow Securities Chen Xianfan, Ni Zhengyang View PDF original

K figure 002833_1

Hongya CNC (002833)

The results are in line with expectations, and the growth of customized product lines highlights: The company disclosed its 2017 annual report, and achieved a total revenue of RMB 820 million, a year-on-year increase of +53.6%, and a net profit of RMB 234 million, representing a year-on-year increase of +51.2%. 2.08 billion yuan, +51.0% year-on-year. In terms of business segments, the company’s main edge banding machine realized revenue of RMB 429 million, which represented +37.5% year-on-year, accounting for 52.3% of the company's total revenue. The sawing saw saw an income of RMB 178 million, which represented +50.7% year-on-year, accounting for 21.7% of its revenue. The company's second largest business segment in 2017. It is worth noting that the two major CNC drilling and machining centers, which are mainly customized production lines, have achieved rapid development. Among them, CNC drills (including multi-row drills) achieved a total revenue of RMB 116 million, a substantial increase of +183.1% year-on-year, accounting for 14.2% of the company's total revenue, +6.5 pct year-on-year, and processing center business revenue of RMB 46 million, a year-on-year increase of +80.8%. , also achieve rapid development. It can be seen that the high growth of the company's customized product line is fully reflected.

The asset quality is high, and the three rates continue to decrease: The company's asset-liability ratio is 15.9%, which is still lower than the year-ago ratio of +3.4 pct in 2016, and there is no short-term borrowing, reflecting the company's high asset quality. The inventory was RMB 109 million, which was +71.1% higher than the beginning of the period, which was mainly due to the expansion of the company's production and operation scale and the increase of raw materials and semi-finished product inventory. The company's operating activities generated a net cash inflow of 226 million yuan, +41.8% year-on-year, with good returns. In terms of the three fees, the company's sales cost was 9.87 million yuan, which remained low. The management fee was 50.31 million yuan, +32.7% year-on-year. The equity incentives implemented by the company in 2017 led to an equity incentive fee of RMB 15.16 million for the current year. However, the management fee rate was only 6.13%, which was still a decrease of 0.97 pct from 2016, reflecting the company's strong management ability for expenses. Overall, the company's three rates totaled 7.26%, which was continuously optimized compared to 2016 -1.25 pct.

The industry maintains rapid growth and the consumption upgrade is proceeding: In recent years, the continuous expansion of real estate construction areas such as houses, hotels and office buildings, and the upgrading of furniture brought about by consumption upgrades have driven the rapid growth of the Chinese furniture industry. According to statistics released by the National Bureau of Statistics, in 2017, the main business income of enterprises in the furniture industry above designated size in China was 905.6 billion yuan, which continued to grow steadily. More importantly, the domestic consumer groups have promoted the rapid development of custom furniture, especially the custom furniture industry in the whole house, in order to enhance the overall living art, personality design and other needs. According to the company depth published in August 2017 [high-growth industry combined with outstanding companies, the company's growth has continuity and certainty], the renewal + new demand in 2020 is expected to bring 17 billion yuan for panel furniture equipment companies. Demand, industry space is vast.

Benefit from domestic import substitution, large export space: The company’s technical strength is outstanding. The high-speed automatic edge-sealing machine independently researched and developed, the intelligent optimization CNC panel saw and the CNC gantry machining center have obtained the high-tech product certification of Guangdong Province. Based on its technical strength, the company's products gradually expand its market share by virtue of its advantages in applicability and cost-effectiveness. At present, the products have been sold to famous furniture companies such as Sofia, All Friends Furniture, and Hollywood Furniture. It is worth noting that the high-end products of domestic woodworking furniture and equipment have little difference with international brands in terms of processing accuracy, product appearance, product structure and performance, but due to their obvious price advantage, the competitiveness of the export market is gradually reflected, especially in industrialization. The export of developing countries in the process has achieved remarkable results. The company's sales outlets in foreign countries have covered more than 40 countries and regions including Iran, Turkey, Australia, Southeast Asia, and the United States. The export business in 2017 has an income of 202 million yuan, which is +24.7% year-on-year and has ample room for development. Investment advice: The company is a technological innovation representative company in the domestic plate furniture machinery industry and has outstanding performance in technology, products and management. Under the background of rapid consumption growth and customization, the company's high growth rate is continuous and deterministic. It is expected that the company will have EPS 2.26, 2.96, and 3.72 yuan in 2018-20, corresponding to PE 25, 19, and 15X, based on the medium and long term The development is firmly optimistic and maintains a “buy” rating.

Risk Warning: The pace of R&D of new technologies and new equipment is less than expected, and peer competition has increased.

Hongya NC important data list
Hongya CNC basic data
  • Total share capital of 135 million shares
  • 5.3 million shares outstanding
  • Earnings per share 1.73 yuan
  • Undistributed profit per share 2.94 yuan
  • Net assets per share 6.92 yuan
  • Return on net assets 23.77%
  • Net profit 19,363,300
  • Net profit growth rate 61.26%
Hongya CNC Investment Rating
Overall rating within one month
Overall rating in March
Statistical period Buy Increase holdings neutral Reduction Sell total
Within one month810009
Within three months9100010
Within six months16300019
Within a year371100048
Hongya CNC Profit Forecast
2016A 2017E 2018E 2019E
Earnings per share (yuan) 1.15 1.73 2.47 3.29
Net profit (100 million yuan) 1.55 2.34 3.34 4.45
name Quote change Research report number Institutional investment rating (nearly six months)
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