Dongfang Yuhong (002271): Q3 performance rapid growth cash flow still needs to be improved

Q3 performance grew rapidly, and cash flow still needs to be improved. The company’s revenue in the first three quarters of 19 / net profit attributable to mothers was US $ 129/16 billion, at that time + 39% / 41%, net profit attributable to non-mothers was 13 trillion, and + 31% over the same period.; 19Q3 realized income / net profit attributable to mother 49.

9/6.

500 million, previously + 35% / 31%, net of non-attribution net profit 6.

100 million, previously +31.

8%, performance in line with expectations.

The first three quarters of the company’s operating cash flow net appeared alternately.

50,000 yuan (-5 years ago).

300 million), cash flow is still under pressure.

Taking into account the company’s third quarter expense rate penetration penetration, slightly raised the EPS forecast for 19-21 to 1.

40/1.

73/2.

16 yuan (previous value: 1).

37/1.

69/2.

07 yuan), with reference to comparable companies’ average 16 times 2020 PER, given 14-16 times the 2020 target PE, fine-tuning the target price to 24.

22-27.

68 yuan (previous value was 24.

71-27.

45 yuan), maintain “Buy” rating.

19Q3 revenue growth slightly increased, due to the large base in the first half of the year, resulting in continued high growth in 19Q3 revenue: the company’s 19Q3 revenue growth rate of 35%, a slight increase from the 41% increase in the first half, overall, demand this year is better than expectedAt the same time, the company actively promotes mining and partners, increasing market share and rapid growth in shipments; at the same time, Q2 major customers continued to increase prices; 2) 19Q3 gross margin decreased slightly by 0.

2pct, down by 1 from 19Q2.

4pct: 19Q3 asphalt market price rose by about 4%, which is basically stable. Since Q2 used winter storage asphalt, the price fell, so the gross profit margin of 19Q3 decreased slightly. 3) The reduction of the expense ratio during the period.

4pct, the sales / management (including R & D) expense ratio was reduced, and the financial expense ratio was increased (increased interest-bearing liabilities and ABN interest expenses increased, etc.), and the final net profit margin was 13%.

The cash flow in the first three quarters is still under pressure. Observing the repayment in the fourth quarter, the operating cash flow in the first three quarters has alternated.

500 million, compared with 5 in the same period last year.

The 3 billion net value has gradually deteriorated and is more serious. It is expected that due to the extension of the non-asphalt supplier account period in 18Q4, some purchase payments will be gradually delayed to 19Q1 expenditure. In addition, the adjusted cash ratio in the first three quarters (plusEndorsement of acceptance notes payable to suppliers and expected maturity14.

1 billion) 99%, down 4 from the same period last year.

7 points.

19Q3 Net operating cash flow replacement.

9 billion, net of inflows after excluding 11 billion performance bond replacement in the third quarter2.

100 million US dollars, matching with net profit is still increasing, but the company’s 19Q3 cash receipts have improved significantly from the previous month. Considering that Q4 is the peak of the company’s receivables, the company has strengthened the evaluation of repayment this year, and Q4 will reset 1.5 billion performanceMargin, we expect net operating cash flow in 19 years to be better than 18 years.

The profit forecast was slightly raised, and the “Buy” rating was maintained to take into account the decline in the expense ratio in the third quarter, and the EPS forecast for 19-21 was slightly raised to 1.

40/1.

73/2.

16 yuan / share (previous value: 1.

37/1.

69/2.

08).We believe that: 1) Gradually reduce the concentration of downstream 夜来香体验网 customers, and increase Yuhong’s brand, service, and channel scale effects. Yuhong’s market share in the waterproofing industry will continue to increase; 2) Yuhong’s multi-category product layout is domesticAt the forefront of peers, it is expected to graft on the rapid expansion of existing channels and long-term development as a service provider of building materials systems.

If the channel revenue share can be increased and the response period will be extended, the company’s operating cash flow is expected to improve. The 19-year report cash flow will still be the focus of observation. With reference to the company’s 16 times 2020 price-earnings ratio, it will give 14-16 times the 2020 target PE.Fine-tune target price is 24.

22-27.

68 yuan (previous value was 24.

71-27.

45), maintain “buy”.

Risk reminder: The transition of new real estate construction has exceeded expectations, the cash flow has improved less than expected, and the price of asphalt has increased significantly.