The most popular Pinggao electric UHV will usher i

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PingGao Electric: UHV will usher in a reversal of performance and step into the track of rapid development


the company released its 2018 annual report. The ratio of operating revenue to net profit attributable to parent company was 10.82 billion and 286million, with a year-on-year increase of 20.74% and -54.59%, and the overall performance was in line with expectations

business analysis:

the sharp drop in gross profit margin has greatly dragged down the performance table. The early scope of new material industries such as graphene based lithium battery, supercapacitor and cobalt oxide bipolar temperature range materials is now, and the operating cash flow has improved significantly. As the revenue of high gross margin products decreased significantly in 2018, and the sales price of superimposed high-value and high-pressure products decreased significantly, the overall gross margin of the company fell by 6.46pct to 14.14%; In addition, due to the increase of business scale, the scale of short-term and long-term loans at the end of the period increased significantly, resulting in a significant increase of 90million yuan in financial expenses compared with 2017. Mainly affected by these two factors, the company's net profit attributable to the parent decreased significantly in 2018. Last year, the company's accounts receivable days rose to 328 days, but the company also reasonably optimized inventory management and appropriately increased the proportion of external accounts payable. The annual operating cash flow rebounded to +770million yuan

UHV has ushered in a period of development opportunities again, which will drive the company's performance to achieve a significant reversal. 2. Operating steps of impact machine in 2018, the company delivered a total of 15 GIS, which fell sharply year-on-year. Affected by this, the revenue of UHV sector fell by about 50% in 2018. However, under the background of steady growth of new infrastructure, the national development and Reform Commission planned a total of 9 7-way and 5-way UHV projects in September last year. The large-scale restart of UHV construction will bring about an investment scale of about 190 billion yuan. The company is expected to obtain orders totaling 6.3 billion yuan (about 2billion orders have been obtained for the two-way and two-way projects that have been tendered). In addition, the UHV orders of about 3.2 billion yuan will be carried forward in 2018. At the same time, the possibility of new approved lines will not be considered for the time, The total amount of UHV orders executed by the company in recent three years is about 7.5 billion. In addition, the bid winning unit price of GIS in the last two tenders of the company has rebounded strongly, reaching a maximum of 83.5 million yuan, with a rise of more than 38% relative to the low price. With the addition of copper, aluminum and other bulk downward trends, the gross profit margin is expected to gradually increase to the previous high level after the rapid increase of the scale of UHV projects

medium and low pressure contributed to a substantial increase in gross profit. At present, the company has entered into provincial projects through EPC, operating lease and other forms. At the end of last year, the company has won the 5billion medium and low voltage transmission, distribution and transformation projects in Zhejiang Province, Gansu Province and Shandong Province. The delivery task of Q4 distribution is tight, which makes us understand the basic installation and commissioning of the distribution sector throughout the year: the revenue and gross profit reached 4.2 billion and 660million respectively, with year-on-year growth of 162% and 335% respectively. In addition, under the trend of accelerating the payment of arrears in distribution investment and rapidly increasing the proportion of provincial bidding, we will not cause the displacement sinking of load sensors under any load. We believe that the company, as a leading company with strict control of national quality system and complete product series, will have more room for improvement in distribution business

profit forecast and investment suggestions:

we expect the company's annual net profit attributable to the parent company to be RMB 581/904/1005 million, with growth rates of 103%, 55.5% and 11.2% respectively. We are optimistic about the huge orders and profit elasticity brought to the company by the large-scale restart of UHV, and the fast development of distribution business is expected to strengthen the sustainability of performance; The company was given a one-year target price of 13 yuan, corresponding to 20 times PE in 2020

risk prompt:

UHV approval failed to meet expectations; The allocated investment fails to meet the expectation; Foreign export policy and exchange rate fluctuation risk:

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