Sany Heavy Industry (600031): The semi-annual report is in line with expectations. Profitability continues to increase. Cash flow reaches record highs.

Sany Heavy Industry (600031): The semi-annual report is in line with expectations. Profitability continues to increase. Cash flow reaches record highs.

SANY Heavy Industry released the semi-annual report for 2019: 1) H1 revenue 433.

86 billion, a year-on-year increase of +54.

27%; net profit attributable to mother 67.

48 billion, a year-on-year increase of +99.

14%; gross profit margin 32.

36%, net interest rate 15.

99% (30 in 2018.

62% and 11.

29%); 2) Q2 single-year revenue of 220.

92 billion, a year-on-year increase of +38.

38%; return to mother 35.

27 billion, a year-on-year increase of +86.

77%; gross margin 33.

94%, net interest rate 16.

35% (19Q1 is 30.

72% and 15.

61%); 3) H1 received merchandise for sale 419 in cash.

700 million, a year-on-year increase of +38.

73%; operating cash flow 75.

950,000 yuan, +22.

1%; accounts receivable + notes receivable at the end of December / end of March / end of June were 20.8 billion / 261.

300 million / 262.

700 million.

Changes in sales structure and intensified competition for expansion have dragged down the gross profit margin of the boring machine, and the profit of concrete machinery has recovered more than expected: from the perspective of the sharing business, 2019H1 excavator, concrete machinery and crane revenue were 159.

100 million, 129.

200 million and 8.5 billion, with annual growth rates of 42.

56%, 29.

55% and 107.

24%, gross profit margins were 36.

84%, 29.

55% and 25.

83%, three years -3.

92pct, 5.

76pct and 1.

27pct. The essence of the increase and decrease of the excavator’s gross profit margin is the increase in the proportion of small and medium-sized excavations in the sales structure and the adjustment of the terminal price under the environment of intensified market competition. The reason for the increase in the gross profit margin of concrete machinery is the continuous high growth of high gross profit pump truck sales.And sustained growth rates.

Under the influence of preferential domestic supply + reduction of elephants, the growth rate of overseas income is low, but profitability is improved: by region, the company’s domestic and overseas income is 354.

6.9 billion and 70.

2.6 billion, the previous growth rate was 64.87% and 15.

34%, gross margin is 34.

01% and 26.

8%, double +0 respectively.

17pct, +1.

2pct.

In the first half of the year, overseas revenue grew the fastest. The expected results are: 1) strong domestic demand in Q1, and production capacity is preferred to meet the domestic market; 2) the substitution effect of high income and low growth of elephants is expected to India, Indonesia, Europe and the United StatesAnd other overseas market revenue growth rate of more than 20%.

The expense ratio hit a record low, and the financial structure is welcoming positive improvements: the sales expense ratio, management expense ratio, research and development expense ratio and financial expense ratio of the 2019H1 companies are 6 respectively.

94%, 2.

09%, 2.

74% and 0.

03%, two years -2.

16pct, -0.

93 points, +1.

25 points and -0.

79pct, gradually decreased by 2.

At 63pct, the decrease in management expense ratio and sales expense ratio was originally due to the scale effect brought by the increase in revenue, while the increase in financial expense ratio gradually decreased due to the increase in exchange income and the long-term decrease in rear income.深圳桑拿网

Asset quality continued to improve, and operating net cash flow set a record high: the company’s accounts receivable turnover rate and inventory turnover rate in 2019H1 were 1.

89 times and 2.

74 times, compared with 1 in the same period last year.

46 times and 2.

24 times, at the same time, the company’s overdue income decreased, and the value-added sales overdue rate was controlled at the lowest level in history; until the end of June, the company’s assets and liabilities made up 53.

31%, financial structure is very stable; net cash flow from operating activities is 75.

95 ppm, an increase of 22 in ten years.

1%, another record high.

The future prospects of the construction machinery industry and the company mainly include: 1) The demand of the excavator industry is relatively stable in the second 四川耍耍网 half of the year. It is expected that the sales growth rate of the excavator industry will be 5?
10%, the structure of small and large digging continues to grow, and middle digging may shrink to some extent; 2) Q3?
The Q4 excavator industry experienced a small replenishment cycle; 3) It is expected that land construction will remain unchanged in the second half of the year, supporting the demand for concrete machinery and lifting machinery, and the proportion of long boom pump trucks is expected to continue to increase, driving concrete machinery stress recovery; 4)The increase in market share of Sany ‘s core products and the elasticity of profit brought about by the scale effect are expected to continue to exceed expectations; 5) Sany continues to advance its internationalization and digitalization strategy, promote thickened product added value, and increase its estimated level.

Earnings forecast and investment rating: The company’s 2019-2020 net profit is expected to be 11.2 billion and 13.4 billion respectively, corresponding to 10 times the PE of 2019. It will continue to be recommended and maintain the “Buy” rating.

Risk warning: infrastructure investment is less than expected, industry competition is intensified, and raw material prices fluctuate.