Daqin Railway (601006): Earnings and profit are basically flat
Event: The company announced the third quarter report of 2019, and achieved operating income of 598 in the first three quarters.
72 ppm, a ten-year increase2.
62%; net profit attributable to mother 120.
880,000 yuan, down 2 every year.
57%; net profit of non-return to mother is 120.
76 ppm, a decrease of 1 per year.
Q3 achieved operating income of 196.
0.6 billion, down 3 every year.
45%; net profit attributable to mother 40.
48 ppm, a decrease of 0 per year.
Thermal power demand is not strong, overlapping and overhaul are ahead of schedule, and the transportation volume of the Daqin Line declined in the third quarter.
In the first three quarters of 2019, the company’s core operating assets, the Daqin Line, gradually completed the front end of cargo transportation volume of 32348, a decrease of 4.
73%, mainly due to the weak demand for coal for downstream thermal power.
Among them, affected by the typhoon weather and September Daqin line maintenance overdue period, the Daqin line completed 10529 errors in the third quarter, a decrease of 7.
81%; annual decline in freight volume led to a decrease in operating income in the first three quarters2.
With the arrival of the coal season in the fourth quarter and the completion of overhauls in advance, the growth rate of the fourth quarter will accelerate and improve, and gradually the freight volume is expected to achieve 4
300 million tons.
The cost of overhaul led to a decline in gross profit margin, and the decline in financial costs led to a decline in the expense ratio during the period.
The company’s operating costs increased in the first three quarters of 20194.
5%, higher than 2.
62% revenue growth, affecting the decline in gross profit margin1.
36pct, gross margin for the first three quarters was 25.
46%, the decline in gross profit is expected to be related to the overhaul ahead of schedule.
But the company’s financial expenses are zero.
91 ‰, a year-on-year decrease of 55%, mainly due to the increase in interest income from bank deposits.
1%, a decrease of 0 compared with the same period last year.
The distribution of the Haoji-Jilin Railway is generally controllable, benefiting from the “Outline of Building a Strong Country for Transportation”.
On September 28, the Haoji Railway was officially opened to traffic. From the perspective of railway lines, the degree of overlap of major sources of goods, and the price comparison (the actual freight price of the Haoji Railway is higher 青岛夜网 than expected), the distribution of the Haoji Railway to the Daqin Railway is generally controllable.
After the Daqin Railway increased its capital to the Haoji Railway, the shareholding ratio reached 10%, becoming its fourth largest shareholder, and it will contribute incremental investment income to the company in the long run.
In addition, the “Outline of the Construction of a Powerful Country for Transportation” clearly proposes to further promote the increase of the proportion of “transit railways”, and the company will benefit from the promotion of “transit railways”.
Investment suggestion: Against the background of stable supply and demand of public transit iron and coal, the company’s performance is highly certain, and it is expected to maintain a 50% dividend rate.
The company’s EPS for 2019/2020/2021 is expected to be 0.
99 yuan, PE is 8/8/8 times, maintain “Buy” rating.
Risk warning: coal demand is lower than expected, the macro economy is down, and the volume of transit to rail transportation is lower than expected