Hengli Hydraulics (601100) Semi-annual Report Comment: Steady Growth in Performance and Significant Improvement in Cash Flow

Key points of investment: The company disclosed the semi-annual report, and the company realized revenue in the first half of 201927.

9.3 billion, an annual increase of 29.

05%, realizing net profit attributable to mother 6.

7.1 billion, an increase of 44 per year.

74%.

Ping An’s perspective: Revenue has grown steadily and profitability has continued to improve.

In the first half of 2019, the company sold 25 excavator oil cylinders.

560,000 units, a year-on-year increase of 13%, and realized revenue of 12.

33 ppm, a year-on-year increase of 25%, and sales growth basically matched the growth rate of excavator sales in the first half of 2019 (14%).

As the excavator cylinders took up part of the production capacity of non-standard cylinders, the company’s non-standard cylinders achieved revenue in the first half of the year.

33 ppm, an increase of 8% per year.

As for hydraulic pump valves, the company’s small digging pump valves continue to maintain a high share, and the medium and large digging pump valve market has been improving month by month.

The company’s casting revenue in the first half of 20192.

29 ppm, an increase of 21% in ten years.

The first line of the company’s second phase of castings has been put into production in June 2019, and the second line is expected to start production in 10 months.

Benefiting from the scale effect and the increase in the gross profit margin of the pump and valve business, the company’s comprehensive gross profit margin in the first half of 2019 was 37.

03%, an increase of 2 a year.

43 units.

Q2 growth has improved, and non-standard fuel tanks and other businesses are expected to accelerate in the second half of the year.

Q1 and Q2 single-quarter revenue growth in 2019 were 61.

63%, 2.

55%, the single-quarter net profit growth rate was 108.

13%, 12.

34%.

We believe that Q2’s performance growth has improved, which is directly related to the growth rate of the excavator industry, and related to the company’s non-standard oil cylinder growth exceeding 杭州夜网论坛 expectations.

With the rebound of infrastructure investment in the second half of the year, the capacity of non-standard cylinders is returning to normal, and the company’s non-standard cylinders and other businesses are expected to accelerate and drive the company’s performance growth.

Sales receipts accelerated, and net cash flow from operating activities increased significantly.

In the first half of 2019, the company’s net cash flow from operating activities was 7.

950,000 yuan, an increase of 313 in ten years.

41%.

Net cash flow from operating activities increased significantly, mainly due to the overall growth of the company’s sales and the timely return of sales payments.

In the first half of 2019, the company’s accounts receivable was turned into 5.

08, compared with 3 in the same period last year.

90 has improved significantly.

The company’s cash flow is good, and it is well prepared to deal with industry uncertainty in the second half of the year.

Investment suggestion: Taking into account the changes in the company’s expense ratio, fine-tuning the company’s profit forecast, it is expected that the company’s net profit attributable to mothers will be 11 in 2019-2021.

6.9 billion / 14.

25 billion / 16.0.9 billion (previous average 11.

39 billion / 13.

5.9 billion / 15.

2.3 billion), the corresponding price-earnings ratio is 22 times / 18 times / 16 times.

As a domestic leader in hydraulic components, the company’s performance is expected to continue to improve, maintaining the “strongly recommended” level.

Risk reminders: 1) The demand of the construction machinery industry is decreasing.

As the company’s main product, the excavator oil cylinder is closely related to the downstream engineering machinery industry. If the demand for construction machinery is significant, the company’s excavator oil cylinder business will follow.

2) Metro construction investment increases expressway.

The downstream requirements of the company’s non-standard oil cylinders include shield machines, high-end marine engineering, and lifting series, of which shield machine cylinders have been the main driving force for growth in recent years.

If the growth rate of investment in rail transit construction in the future accelerates, the demand for shield machines will follow, and the company’s non-standard cylinder business will not grow as expected.

3) The business development of hydraulic pump valves was less than expected.

The company’s latest pioneer’s hydraulic pump valve business is mainly focused on overseas giants. If the company’s new business development is less than expected, it will lead to an overall performance growth indicator.