Hangmin Shares (600987) 2019 Interim Report Review: Stable Short-term Performance

Hangmin Shares (600987) 2019 Interim Report Review: Stable Short-term Performance
2019H1 revenue / attributable net profit are -11 respectively.75% / 7.32%, short-term business adjustment, long-term main business to increase efficiency and increase production brings highlights.Adjust 2019/20 EPS forecast to 0.99/1.07 yuan, plus the 21-year EPS forecast is 1.14 yuan, maintaining the “overweight” rating. The 2019H1 revenue / net profit attributable to mothers respectively changed by -11 over the same period.75% / 7.32%.1) The company’s 2019H1 achieved revenue of 34.64 billion (-11.75%), net profit attributable to mother 3.2.3 billion (+7.32%), net of non-attributed net profit3.3.9 billion (+22.49%), the change in the net profit of non-returning mothers is mainly due to the loss of 6,265 financial liabilities held by the company in 2019H1.480,000 yuan caused a breakthrough loss in changes in fair value.2) Profitability: The overall gross profit margin increased 4.47% to 20.5%, mainly due to the adjustment of the product structure of the gold jewelry business, and the proportion of varieties with higher gross profit margins increased;74% (+1.26pcts), the management expense ratio increased to 2.48% (+0.59pct), selling expenses 1.36% (+0.23pct), financial expenses 0.07% (-0.21pct).3) Inventory / receivable turnover: inventory turnover days are 77.01 days (+47.65 days), accounts receivable turnover days are 13.15 (-7.85 days), mainly due to the completion of the acquisition of Hangmin Batai in December 18, the inventory turnover days count of gold jewelry, account receivable turnover days replacement. The printing and dyeing business remained stable, and the gold business was adjusted in the short term.1) Printing and dyeing business: 2019H1 revenue 15.9.8 billion (-3.40%), accounting for 46 of the company’s total revenue.12%, profit budget is 308.28 million yuan (-1.57%), the ratio of profit maximization to the business revenue reached 19.23% (+0.36pct), even if downstream demand is weak, the company’s printing and dyeing business remains stable.2) Gold jewelry business: Revenue 14.8.5 billion (-24.32%), accounting for 42 of the company’s total revenue.85%, profit budget is 59.6 million yuan (+5.90%), the ratio of profit maximization to the business revenue is 4.01% (+1.15).The decline in revenue was mainly due to a) the rapid rise in gold prices caused consumers to wait and see, and the total sales volume of gold jewelry and ornaments caused by the consumption trend of reduced demand for heavy weights was -16.3% to 32.75 tons, b) jewelry wholesale business ratio -3.39 points to 16.67%, the proportion of processing business increased to 83.33%.Profit growth was mainly driven by the increase in the proportion of “fine, light, new” high-margin varieties.3) Other businesses: Thermal power, weaving, non-woven fabrics, industrial water, sewage treatment and offshore logistics and transportation have synergistic supporting advantages, of which thermal power business revenue3.4 billion (+1.71%), with a total profit of 0.75 billion (+13.17%). The main business insists on efficiency improvement and expansion, and there are many things to watch in the future.1) Main business technology upgrade + production expansion: Quickly promote the construction of Hangmin Baitai Gold Fashion Industrial Park and the expansion and commissioning of a new plant for Hangmin Contract Precision Machinery.2) Increase investment in science and technology to achieve energy saving and emission reduction: In 2019H1, the company’s R & D investment 北京桑拿洗浴保健 is zero.8.6 billion (+41.60%), it is expected to continue to expand research and development investment in the future, to achieve energy saving and emission reduction in printing and dyeing business, organically combining high-end products, green environmental protection and fashion and other elements.3) Improve supply chain management + cost reduction and downgrade: Give full play to the advantages of procurement, pay close attention to market price fluctuations, and reduce procurement costs. Risk factors: the risk of rising raw material prices and equipment maintenance costs; the risk that the speed of the regional government’s transformation and upgrading will affect the printing and dyeing industry; the risk that the gold jewelry industry will not keep up with the trend of upgrading the consumption structure. Investment suggestion: The company’s short-term performance is still under pressure, but the long-term main business has increased efficiency and expanded production. There are no shortage of highlights. Adjust the 2019/2020 EPS forecast to 0.99/1.07 yuan (previous forecast was 1.09/1.17 yuan), plus the 21-year EPS forecast is 1.14 yuan, to maintain the “overweight” level, it is recommended to continue to pay attention.