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Yutong Technology (002831) Q1 Comment: Performance Meets Expected Cash Flows Significantly Improves Production Capacity, Continues Expansion, Accelerates Industry Consolidation

Yutong Technology (002831) Q1 Comment: Performance Meets Expected Cash Flows Significantly Improves Production Capacity, Continues Expansion, Accelerates Industry Consolidation
Key points of the report Description Yutong Technology released a quarterly report. In the first quarter of 2019, the company’s revenue / attributable net profit / non-attributable net profit was 17 respectively.85/1.54/1.40,000 yuan, an increase of 10 in ten years.54% / 10.69% / 31.51%. Incident review categories and customers expanded steadily, and the company’s revenue grew steadily.Q1 company income increased by 10.54%, from the point of view of the category, the company deeply cultivated its 3C main business. At the current period, its core customers, Huawei and Xiaomi, both launched 19-year flagship models, or they have contributed positively to the company’s revenue; at the same time, they have also accelerated the development of tobacco / wine / big health /Expansion in cosmetics packaging and other areas, among which Q1 domestic tobacco / alcohol output increased and increased7.8% / 0.2%, the material supports the company’s revenue upwards; in terms of customers, the company also accelerates the expansion of new customers while deepening the binding. With the gradual advancement of the customer’s diversification strategy, the risk of a single customer is gradually weakening.Newly consolidated companies in Q1 2019 (such as Jiangsu Dejin) also contributed some revenue.However, the company’s revenue growth rate also has a certain speed. We judge that the sales breakthrough caused by the pressure on smartphone sales and Yanghe manufacturers’ price increases; Looking forward to the second quarter of 2019, customers and business expansion are steadily advancing.The mechanism has been rationalized, and the contribution to the company’s income has been promoted. The exchange rate, cost and other factors continued to improve, and the company’s gross profit margin improved.The Q1 company’s attributable net profit also increased by 10.69% to 1.$ 5.4 billion. Excluding recurring gains and losses, net profit also increased by 31.51% to 1.04 ppm (in 18Q1, the investment cost of non-investment mainly from the acquisition of a subsidiary is less than the income generated by the fair value of the identifiable net assets of the investee when the investment was obtained; 19Q1 non-economic or mainly from government subsidies)The increase in profit was mainly due to the improvement in exchange rate and cost factors. Among them, the exchange rate: 19Q1 USD averaged RMB 6.75 yuan, a year-on-year increase of 0.38 yuan; raw materials: the company’s main raw material white cardboard average price is 4954.55 yuan / ton, it is estimated that the same period last year fell 26.69%.Driven by this, the company’s gross margin / net margin increased and changed1.90pct / 0.26 points to 27.09% / 8.98%.1Q1 company fee cost 20.92%, a decline of 0 every year.89pct, sales / management R & D / financial expense ratio change range -0.65pct / 1.66 points / -1.90pct, in which the increase in the rate 都市夜网 of management R & D expenses increased mainly because the company increased its R & D investment, and the current R & D expenses increased by 46.81% to 87.25 million yuan; significant improvement in financial expense ratio, or mainly due to the improvement of exchange rate factors.The net operating cash flow of the company actually increased by 268%, mainly due to the recovery of payment. The current bill and bills receivables decreased by 1.1 billion US dollars at the beginning of the year (18Q1 bill and bills receivables decreased by 400 million US dollars at the beginning of the year).The development of some high-quality customers, the account period is relatively high, due to the smooth return of 19Q1. Accelerate production capacity layout and strengthen deep binding with core customers.In order to better serve its core customers, the company plans to issue 1.4 billion 北京桑拿洗浴保健 convertible bonds, build / expand the four major production bases in Yibin and Xuchang, and invest in the establishment of Guizhou Yutong in January; in March and Chongqing shared industrial investment limitedThe company’s long-term cooperation agreement plans to jointly invest 1.6 billion to build a smart factory in Chongqing.Taking into account the service limitations of commercial packaging (usually 150 kilometers), Yutong has continued to expand its production capacity to achieve in-depth coverage of customers in major regions across the country, consolidating its leading position in the global commercial packaging field. The paper packaging industry has a vast space, and international experience seems to be able to breed an industry giant.The company is a leading high-end paper commercial packaging company, crowded with high-quality customer resources such as Huawei, Lenovo, Foxconn, etc., and leverages the comprehensive advantages of production, technology and models or achieves customers. The category and production capacity are rapidly expanding, and the revenue end materials continue to exceed the industry growth rateFaster growth and gradually enjoy the leading premium.The reduction of repressive factors such as profit-side conversion costs, expenses, and exchange rates, along with the rationalization of the benefit mechanism, gradually releases flexibility.We forecast the company’s EPS for 2019-2021.87/3.54/4.41 yuan, corresponding to PE is 18X / 14X / 11X.The packaging industry has a large market, low concentration, and a prosperous economy. As an outstanding leader in the industry, the company has technology reserves, high-quality customer accumulation, refined management and control, and it is expected to accelerate market share increase. After the completion of the high-speed transfer plan,It is expected to show a consensus and confidence, enhance the market liquidity of the stock, and continue to perform a “buy” rating. Risk Warning: 1. The RMB has appreciated significantly and the prices of raw materials have risen sharply; 2. Orders from major customers have decreased significantly.