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Luyang Energy Conservation (002088): Ceramic Fiber’s Growth Rate Exceeds Expectations, ROE Sets New High

03/12/2020

Luyang Energy Conservation (002088): Ceramic Fiber’s Growth Rate Exceeds Expectations, ROE Sets New High
Investment Highlights Event: The company disclosed its semi-annual report for 2019, reporting and realizing operating income10.35 ppm, an increase of 35 per year.48%; net profit attributable to mothers1.740,000 yuan, an increase of 16 in ten years.35%; net profit after deducting non-return to mother1.69 ppm, an increase of 12 in ten years.12%, basic profit returns 0.48 yuan / share.The company achieved operating income in the second quarter of 20195.780,000 yuan, an increase of 26 in ten years.85%; net profit attributable to mothers1.02 ppm, a six-year increase of 6.29%; net profit after deduction is 0.98 ppm, a decrease of 2 per year.05%, basic profit income is 0.28 yuan / share. Opinion: The growth rate of ceramic fiber business exceeded expectations, and gross profit margin improved.The company achieved operating income in the first half of 201910.35 ppm, an increase of 35 per year.48%.In the first half of the year, the company’s gross profit margin was 39.86%, a decrease of 3 per year.30pct. The rapid growth in revenue and the increase in gross profit margin are mainly due to the rapid growth in the sales volume of some of the company’s low-cost thermal insulation ceramic fiber products, and to increase market share and promote production capacity, the company has adopted an active price adjustment for basalt fiber products.Promotion strategy. The expense rate during the period was basically stable.The company’s expense ratio during the first half of the year was 21.6%, up by 1 each year.3pct, but still at the highest level in history.By item, sales expenses, management expenses, 北京桑拿洗浴保健 R & D expenses, and financial expense ratios have changed several times.5pct, -0.6pct, 1.5pct and 0.2pct.The increase was mainly due to the increase in the total amount of goods sold and the increase in the distribution of stock expenses by more sales staff, the decrease in foreign exchange gains due to exchange rate changes, the increase in R & D projects, and the increase in R & D investment. The operating capacity was maintained at a high level, and ROE reached a new high.In the first half of 19, the company’s accounts receivable turnover rate reached 1.82 times, down by 0 every year.04 times; inventory turnover rate reached 2.12 times, rising by 0 every year.39 times, reaching the highest level in history since 2012.With steady and steady growth in revenue, operating capacity continued to remain high.In the first half of 2019, the company expects ROE to reach 8.61%, an increase of 0 every year.6 points.We have expanded the ROE through DuPont analysis. It can be seen that the company’s ROE level has increased rapidly since bottoming out in 2015. It has gradually improved its net interest rate significantly, as well as repaired asset turnover, and its equity multiplier has remained stable. Profit forecast and investment advice: We adjust the profit forecast and expect the company’s net profit attributable to the parent to be 3 in 2019-2021.900 million, 5.100 million and 6.5 trillion, the closing price on August 21 corresponds to PE of 2019-2021 is 11 respectively.1, 8.5 and 6.7x, maintaining the rating of “prudent increase”.The company’s self-operated positions exceed 1%. Investors should pay attention to the risk warning: the expansion of new application areas is less than expected, the policy implementation is less than expected, and the industry’s competitive landscape is deteriorating.