Hailiang (002203): Interim Report Steady Growth Project Continues to Promote Leading Copper Processing Leader

Interim results have steadily increased.

The company released an interim report and realized revenue of 208 in the first half of 2019.

40,000 yuan, an increase of 3 in ten years.

61%; net profit attributable to mother 6.

44 ppm, an increase of 16 in ten years.

92%.

In the first half of the year, the company sold 36 pieces of copper processing materials.

5In the beginning, it grew by 23.

09%.

We believe that the company has a solid performance in the past. From 2013 to 2018, the company’s sales volume and the net profit attributable to the parent company increased by 28 respectively.

08% and 25.

79%.

In the first half of 2019, under the background that the air-conditioning boom alternated slightly, the self-produced sales volume still had a growth rate of more than 20%, reflecting the company’s alternative anti-cyclical change attributes.

The gross profit per ton of copper increased substantially, and the increase in exchange losses in the second quarter dragged down performance.

In the first half of the year, the company’s sales of copper processing materials were basically self-produced by the company, and the amount of commissioned processing was very small. Therefore, the gross profit per ton of copper material increased significantly.

After calculation, the gross profit per ton of copper processing materials in the first half of 2019 reached 3947 yuan, while the gross profit per ton of vertical tonnage last year was only 3149 yuan.

At the same time, looking at the three expenses, the second quarter financial expenses1.

72 trillion increased significantly from the 48.98 million in the first quarter. We believe that the main reason is the increase in exchange losses, which dragged down the performance to a certain extent.

The project construction is advancing steadily, and the synergy of the acquisition of KME is expected.

As of the first half of 2019, “Guangdong Hailiang has an annual output of 7.

The investment progress of the “5 cutting-edge precision copper pipe project” and “Anhui Hailiang’s annual production of 9 cutting-edge precision copper pipe project” has reached 89.

50% and 74.

34%, it is expected that all production will be reached in 2020.

On March 31, 2019, the company completed the report on the settlement of equity and assets with KME Group, and the report realized an investment income of 72.

150,000 yuan.

We think the company’s acquisition of KME could have synergies.

The company can absorb the advanced production 武汉夜生活网 technology of KME copper alloy rods, and at the same time use the KME brand and channels to expand the European market of copper pipes and quickly increase the global market share.

In addition, the company will export copper pipe production and refined management experience, improve the copper pipe production efficiency of European companies, reduce production costs, and improve profitability.

Profit forecast and estimation.

We believe that the company’s bright spot is mainly to expand market share and increase the proportion of high value-added products, while using a variety of alternatives to avoid the risk of industry fluctuations in the upstream and downstream cycles, and ensure smooth sales channels for increasing production capacity.

In the copper pipe industry, we believe that the demand for the downstream 南京桑拿论坛 air-conditioning industry will be boosted by the stimulus policy in 2019. The arrival of the small peak of real estate completion in 2019 will also usher in an industry inflection point.

We expect the company’s EPS for 2019-2021 to be 0.

66, 0.

79 and 1.

00 yuan / share, with reference to the estimated level of comparable companies, given a 19-20 times PE estimate for 2019, corresponding to a reasonable value range of 12.

52-13.

18 yuan, given the “preliminary market” rating.

Risk Warning: Downstream demand is less than expected.

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