Yutong Technology (002831): Good for gradually realizing long-term growth can be expected

Yutong Technology (002831): Good for gradually realizing long-term growth can be expected
Event 1: Yutong Technology released the 2019 first quarter report, and the company achieved revenue of 17 in Q1 2019.9 trillion, an increase of 10 in ten years.5%; net profit attributable to mother 1.54 ppm, an increase of 10 in ten years.7%; net profit after deducting non-return to mother 1.40,000 yuan, an increase of 31 in ten years.5%.Net operating cash flow of the company 7.50,000 yuan, an increase of 268 in ten years.4%. Event 2: The company announced that its wholly-owned subsidiary Vietnam Yuzhan Packaging Technology Co., Ltd. intends to use its own (self-raised) funds of 60.34 million yuan to purchase the original leased plant and land use rights.Urban Development Corporation.The two companies intend to transfer the remaining right to use two parcels of land and four plant buildings to Yutong Technology’s subsidiary with a total land area of 40,040.9 square meters, with a total plant and office area of 22,546 square meters. Event 3: The company announced that it has signed the “Yutong Technology Smart Factory and High-end Intelligent Packaging Project Cooperation Agreement” with Chongqing Sharing Industrial Investment Co., Ltd., intending to invest RMB 1.6 billion with its own (self-raised) funds in Chongqing University City TechnologyThe industrial park builds the Yutong Science and Technology Smart Factory Demonstration Zone, which mainly researches and develops high-end smart packaging projects for the army, and manufactures and sells them.The planned land area of the project is about 83 acres, and it is expected that all production will be achieved by 2024. The gross profit margin improved and the expense ratio increased slightly.2019Q1 company gross margin 27.1%, increase by 1 every year.9 points, 3 than the oxide.6 points.The increase in gross profit margin was mainly due to: 1) the upstream paper price continued to decline, and the average price of coated paper / white cardboard / double offset paper / corrugated paper in 2019Q1 was 5532/4850/5916/3636 / ton, while falling respectively.3% / 26.3% / 19.6% / 4.4%, the decline in paper prices is good for the company’s cost pressure release.2) The exchange rate of 2019Q1 increased by more than 2018Q1, and the median price of USD / CNY in 2019Q1 was 6.75 yuan, a year-on-year increase of 6%.The expected decrease in gross profit margin from the previous quarter lies in the following: 1) The US dollar depreciates from the previous quarter, and the mid-dollar price of USD / RMB in 2019Q1 is 2% lower than that in 2018Q4.2) The first quarter is the off-season for consumer electronics and the peak season for tobacco and alcohol packaging. Due to the higher gross margin of consumer electronics, the adjustment of product structure caused the company’s comprehensive gross 杭州桑拿 margin to decline sequentially.The company’s 2019Q1 sales expense ratio is 4.2%, zero for one year.7pct, ring than epoxy 0.1pct; the rate of management expenses (including R & D expenses) is 12.6%, increase by 1 every year.7pct, up 8 points from the previous quarter.Finance expense ratio 4.1%, ten-year average 1.9pct, an increase of 2 from the previous month.8pct.We judge that financial expenses are still affected by foreign exchange losses.2019Q1 company net profit 8.6%, flat for one year, down 4 from the previous month.3 points. The accelerated expansion of production capacity is expected to grow in the future.From the company’s announcement of the announcement of the Vietnam project and the previously issued convertible debt project to raise funds, the core lies in the planning of expanded production lines, including the layout and construction of Southeast Asian packaging production bases such as Vietnam and Indonesia.It is in the stage of active promotion and has laid the foundation for future growth. The trend of increasing concentration is optimistic that the company will open the packaging value chain.According to industry online data, the packaging industry is a trillion-dollar market industry, with the United States’ leading market share of CR2 packaging exceeding 60%, and the current growth rate of China’s leading packaging cities (CR2 2).7%), there is room for improvement in the future.We are optimistic about the cost advantage of Yutong Technology’s packaging design experience and scale effect. At the same time, the company’s front-end design capabilities and terminal delivery capabilities can significantly enhance customer credibility, and it is expected to become a leading Chinese packaging company in the future. Investment suggestion: We expect the company to achieve net profit attributable to mothers in 2019-2021.6, 14.4, 17.90,000 yuan, an increase of 22 in ten years.3%, 24.5%, 24.5%; corresponding to EPS 2.89, 3.6,4.48 yuan, downgraded Yutong Technology rating to “overweight” rating. Risk reminders: the risk of escalating trade frictions, the risk of exchange rate changes, and the risk of a sharp rise in raw material prices

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