Honglu Steel Structure (002541): Consecutive resumption of work has limited impact on long-term profit

Honglu Steel Structure (002541): Consecutive resumption of work has limited impact on long-term profit
Investment suggestions Recently, due to the impact of Wuhan pneumonia epidemic on production and operation and market sentiment, Honglu Steel Structure faces a 20% decline from its previous high.We believe that the gradual reduction of resumption of work may have a certain degree of impact on the company’s 1Q20 profit, but its vertical impact is 佛山桑拿网 limited. We believe that it has been oversold before, and investors are advised to buy on dips. Reasons The company’s Hubei area has a capacity budget of 50, which accounts for a limited proportion of the total capacity.Up to now, the company has ten production bases, of which the production base in Hubei has been constructed in three phases, which were put into production in 2009, 2010 and 2013, respectively. It is one of the company’s most mature production bases, with a current production capacity of 50 units.After the outbreak of pneumonia in Wuhan, the production and operation of enterprises in Hubei area were severely affected, which caused a threat to the company’s operations.However, we believe that the new production capacity of the conversion company is gradually completed and put into operation. In 2020, the average production capacity of the company will reach 350 tons, and the production capacity in Hubei will account for about 14%, which is relatively limited. Waiting for the calculation to delay the return of work will affect the performance of about 5ppt, if the consideration of rush work will have a smaller impact. Based on assumptions such as the number of days of resumption of work in Hubei and non-Hubei regions, the company’s production capacity in Hubei, the company’s 1Q revenue and profit ratio and 1Q income statement structure and other assumptions, the company’s performance after 1Q20 may be affected gradually, and its net profit orThe period was flat; but from the previous point of view, due to the company’s revenue in the first quarter, the profit ratio was relatively low, and its impact on gradual performance was only about 5 ppt.And if the epidemic situation gradually stabilizes in the future and production and operations return to normal, the company can resume the 1Q reduction in production schedule by rushing the construction period. We expect that the gradual resumption of work will have a greater impact on the company’s continuous operating performance. Continue to be optimistic about the company’s performance growth in the next two years and recommend buying on dips.The CICC macro team judges that the impact of the epidemic on the economy is concentrated in 1Q, and the duration or amount is limited.We believe that the short-term impact of the epidemic will not change the company’s long-term operating trend, and we continue to be optimistic about the rapid growth in performance driven by the company’s capacity expansion.And at the same time, even if we do not consider rushing after the epidemic, according to our calculations, the impact of continuous resumption of work on the company’s performance is only about 5 ppt, and the company’s own high point has been converted to 20%, and the corresponding 2020e P / E has returned to 8.4 times the level, it is recommended that investors buy on dips. Earnings forecasts and estimates We maintain our earnings forecasts unchanged.The current price of the company corresponds to only 2020 / 2021e P / E.4x / 6.6 times, maintain outperform industry rating and target price of 14.4 yuan is unchanged, corresponding to 12.0x / 9.4×2020 / 2021e P / E and 43% upside. Risk resumption is expected to exceed expectations, and production capacity progress is ahead of expectations.

Related Articles

Experts analyze common carcinogens in life

Experts analyze common carcinogens in life Home has always been regarded as the safest haven. Recently, however, the World Health Organization released a comprehensive research report on endocrinology, completed by 16 experts after two years of careful research, and said that household items such as carpets, sofas, appliances, water bottles, toys, credit cards, etc. existBrominated […]
Read more

CPI returns to the era of 3 pork prices rose to 100% for the first time this year

The price of pork in a supermarket in Beijing in early April.According to data released by the National Bureau of Statistics on the 12th, the national CPI (Consumer Price Index) returned to the “3 era” in five months in April, and the CPI increased by 3 in 4 months.3%.Among them, pork prices fell by 7.6%, […]
Read more

Jianghe Group (601886) 2019 First Quarterly Report Review: Increased Profits, High Order Increase and Quality Enhancement

Jianghe Group (601886) 2019 First Quarterly Report Review: Increased Profits, High Order Increase and Quality Enhancement Investment Highlights: Event: The company released its financial results and operating data for the first quarter of 2019. Q1 achieved revenue of 30. 5.3 billion, an increase of 0. 84%, net profit attributable to mothers1. 1.5 billion, an increase […]
Read more
Search for: