Kangli Elevator (002367): Scale effect shows gross margin bottoming out
Kangli Elevator released semi-annual report performance forecast: It is estimated that H1 net profit will be 97.3 million -1.
0.5 billion, an increase of 140% -160% over the same period, slightly exceeding our expectations.
Mainly due to the improvement of the industry’s prosperity and the control of product prices by Kangli, the cost effect appeared.
Net profit is expected to be 2 in 19-20.
04 billion / 2.
8.6 billion, corresponding to PE is 32 times / 23 times, the industry’s margins are getting better, the turning point in 19 years, maintaining the “prudential recommendation-A” rating.
2019H1 returns to mother’s net profit of 97.3 million -1.
0.5 billion, an increase of 140% -160% in ten years.
Mainly because (1) benefiting from the increase in the conversion rate of orders in hand, the company’s operating income in the first half of the year increased by about 17% compared with the same period of the previous year; (2) the company’s earlier control product sales price decline showed results, and the price of raw materials was significantly stable, and revenue increasedThe scale effect reflects that the gross profit margin bottomed out in the last four quarters; (3) the current efficiency of cost control, and sales expenses decreased compared with the same period of the previous year; (4) non-recurring losses and benefits in the first half of the year were approximately 29.22 million yuan, mainlyFinancial management and real estate income decreased by approximately 22% compared with the same period of the previous year, and the growth rate of net profit after deduction was offset.
One of the reasons for the outstanding performance: low cardinality effect.
In the first half of 2018, net profit was only 41 million, with a gross profit margin of 26.
7% (down 6.
6pct), both hit a new record low, mainly due to: ① the elevator industry was fiercely competitive in 2016-2018, the company lowered product sales prices in the second half of 2016 and 17 years, affecting slender 18-year performance; ② prices of major raw materials and steel in the first half of 18To maintain a high level, outsourced and outsourced parts suppliers must also increase part prices accordingly and reduce cost pressure; ③ In 18 years, the company increased the expansion of smart manufacturing plants, test centers and smart equipment, and the depreciation charge increased accordingly.
The scale effect has not yet appeared in the short term, and the unit fixed cost has increased.
The second reason for the outstanding performance: the company’s fundamentals are improving, and profitability is repaired.
In terms of price, more than 200 manufacturers were eliminated in the elevator industry in 18 years, and many manufacturers transformed to home improvement, special renovation and aftermarket. Through the elimination of backward production capacity in the industry, elevator prices have been effectively controlled in the second half of 18; in terms of cost, steel prices have also changed fromIn the second half of the year, the high point gradually dropped (currently maintained at the same level as in the first half of the year), and the company’s fixed asset depreciation also began to decline.
In the first half of 19, the shipment of Kangli Elevator maintained 20% + growth, and the scale effect significantly repaired profitability: 2019Q1 gross profit margin 26.
9%, has stopped the decline and improved, with a net interest rate of 3.
9%, the rebound is obvious, the gross profit margin is expected to increase in 19H1, and the margin is even more obvious.
In the fiercely competitive environment, the development strategy of major customers is the company’s response strategy. At present, the company has established long-term strategic cooperative relations with Country Garden, Greenland Group, Wanda Real Estate, Ocean Real Estate, Hailiang Real Estate, Zhengshang Real Estate, and Helenburg.The follow-up will bring a breakthrough revenue increase to the company.
At the same time, the company actively strengthened the construction of channels and service points. 69 branches and service centers have been established, including 43 branches, and 29 A-level installation and maintenance qualifications. This has strengthened the breadth and depth of market sales and provided customers with the best resources.Long-term maintenance and further expansion provide continuous guarantee.
Escalator and maintenance business are follow-up highlights.
In 2016, Kangli began to focus on the layout of rail transit escalators and achieved significant results. In 2018, the company repeatedly won bids for domestic rail transit elevator projects, which became a strength to compete with foreign brands. In 2018, the new price of rail transit escalators exceeded 600 million yuan.
At present, the company ranks fifth in China in the field of escalators, and ranks first among local brands. It has already made escalators with a vertical height of 35 meters (which can also reach 50 meters of qualification). Even in recent years, escalators have been affected by rising raw material costs and fierce competition.However, Kangli insisted on not keeping prices down to guarantee its reputation and quality.
We believe that although the gross profit margin of the escalator is not high, it is very strategic.
If the rail transit market is well established in China, it will be advertising and certification for the product, and its popularity will be very high, which will promote straight ladders and maintain business development.
At the same time, the differences between Kangli’s high-end escalators and foreign famous brands are gradually narrowing, and competition will continue to increase. Rail transit escalator business is expected to become a new driving force for the company’s growth.
Maintenance is also one of the follow-up points: the maintenance market needs to grow slowly, the foreign brand has a large amount of maintenance, and future maintenance may be replaced by imports. The company has established a major modification and manufacturing business department, and will continue to develop the maintenance business. Currently, KangliPossession amount 2.
20,000 units, 10% of the maintenance business is done on its own, and the market space cannot be underestimated. Of course, with the foreign brands Mitsubishi and Hitachi China’s 6,700,000 units, it will take time to increase the market share.
Execution orders maintained growth.
As of the end of 2018, 54 active orders were being executed.
40 ‰, an increase of 9 in ten years.
2%, 54 orders executed in the first quarter.
100 million, an annual increase of 7.
Affected by the loose currency in the first half of the year and the improvement of real estate completion, Kangli’s shipments increased by 20% in the first half of the year. Orders picked up in the fourth quarter of 2018, and a certain degree of growth was maintained in January-May 19. The number of transfers continued to increase, and the scale effectContinue to appear.
Sales of the elevator industry soared, and the turning point merged in 19 years.
According to the National Bureau of Statistics data, the elevator output was 35 in the first five months.70,000 units, with a growth rate of 17%. After 2016, the first is the transformation of the real estate industry, and the second is the fierce competition in the disorderly price of the industry, which has caused the unit price and gross profit of elevators to continue to decline. The bottom of this industry has continued for three years.Until the completion of the first half of 2019, the semi-annual completion data has improved, and the elevator industry has also improved. The initial performance is a rebound in the amount of transfer, coupled with the decline in costs, and the scale effect will be prominent.Gross profit margin will increase by 1 pct), and improve the profitability of elevator manufacturers.
Update demand will continue to provide momentum, with peaks occurring in 21/22.
Generally speaking, the retirement period of elevators of Mitsubishi, Hitachi and other Japanese elevators is about 10-15 years, and the retirement period of European and American elevators such as Otis, Schindler and KONE is 20-25 years.
Because most of the standards for the highest elevators are set with reference to Japanese standards, the life span of elevators is around 15 years.
Taken together, the 北京桑拿洗浴保健 domestic scrap life of elevators is about 15 years. We assume that after 15 years of use, the elevators will be scrapped by 1/6 every year, and all of them will be scrapped after 20 years of use.
Calculated with the 5.62 million units in 17 years, it can be predicted that the update demand for 2019-2021 will be 6 respectively.
220,000 units, 7.
930,000 units, 10.
100,000 units; the corresponding speeds are 26.
44%, the peak of update growth rate will appear in 2021-2022.
The market structure has improved significantly. After the industry clears up, the price is expected to pick up.
Fundamentally, the “disordered competition and price war” is getting worse. Due to the lack of long-term development strategic planning, some machines often deviate from the management and control of the supply chain and focus on pure price competition. Therefore, these elevator companies have not formed R & D., A virtuous circle of production and sales.
Many elevator companies lack the technology and conditions for upstream elevator parts production, the industry is down and the profit space is further compressed. At the same time, the bargaining power of large upstream elevator parts suppliers is also weak, which further weakens the elevator companies’ technological innovation capabilities.A vicious circle has formed.
The industry’s overall gross profit margin in 18 years, the net profit rate hit a record low over the years, and even the industry giants have fallen into a “trough pain period.”The operation of the industry also promotes the continued improvement of the industry structure.
In-industry research understands that industry prices have generally stopped the decline in the first half of 19 years.
It is recommended to pay the highest attention and maintain the level of “Careful Recommendation-A”.
The profit recovery brought about by the “scale effect + improvement of the pattern” will continue. The elevator is expected to start the industry boom cycle of 3-5 years. At present, the biggest risk comes from the cost side (steel and rare earth prices).
19 years is expected to be a turning point in the performance of the elevator industry, and the renewal demand in the next few years will lengthen the boom cycle. It is estimated that Kangli Elevator will have a net profit of 2 in 19-20.
04 billion / 2.
8.6 billion, corresponding to 32 times / 23 times the PE, maintaining the level of “Prudent Recommendation-A”
Risk reminders: (1) Steel price increase: The main raw material of elevators is steel. If the price of steel rises, it will significantly affect the gross profit of the product; (2) Rare earth price fluctuation risk: the remaining is the main raw materials of elevator key components traction machinePrice (3) The growth rate of real estate is lower than expected: Real estate is still the largest downstream of the elevator industry. If the real estate completion area exceeds too quickly, it will significantly affect elevator demand.
(4) Asset impairment losses.