Seiko Steel (600496): Asset impairment caused slightly lower results than expected 2019 outlook remains positive

Seiko Steel (600496): Asset impairment caused slightly lower results than expected 2019 outlook remains positive
2018 results are lower than expected Seiko Steel’s 2018 results announced: operating income86.30,000 yuan, 天津夜网 an annual increase of 32.1%; net profit attributable to mother 1.80,000 yuan, an increase of 193 in ten years.0%; operating income of 30 in the fourth quarter of 2018.5 ten percent, an annual increase of 61.2%; net profit attributable to mothers was 348.6 billion (net decrease in the same period last year); performance was slightly lower than our expectations due to goodwill impairment.  The company’s gross profit margin decreased by 0 in 2018.5ppt to 13.The decrease was narrowed by 7%, mainly due to the stabilization of steel prices and the increase in the contribution of technology transfer business income with high gross profit margins; driven by the reduction in the period’s expense ratio, the reduction in net interest rate decreased by 12ppt to 2.1%.Net operating cash margin 2.3 trillion, less once a year 3.30,000 yuan, mainly due to changes in operating assets.  The development trend continues to be optimistic about the profit growth of the main steel structure industry in 2019.In 2018, the company’s steel structure business income increased by 32 each year.1%, the highest growth rate in the past ten years, mainly due to the growth of business commitments in 2016 and 2017; steel construction commitments increased by 19% in 2018, maintaining a high level, which is expected to drive the main income of steel structure high growth.Benefiting from the stabilization of steel prices, the decrease in the gross profit margin of steel structures in 2018 has been reduced, and the gross profit margin in 2019 has promoted a rebound.  Technology joining is expected to continue to support strong growth.In 2018, the company entered into a multi-level assembly technology cooperation agreement with Qinhuangdao, Hebei, Panjin, Liaoning, and Taiyuan, Shanxi, and gradually carried out total business commitments.700 million, an increase of 240% in ten years.At present, the company has completed the investment in the registered capital of the Ningxia Project Joint Venture Company. We expect that the ongoing promotion of projects in progress and new projects undertaken in the future aims to continue to support the company’s strong growth in performance.  The layout of production capacity continued to improve, and the development of prefabricated building EPC improved.In 2018, the company newly undertook the prefabricated construction EPC business14.80,000 yuan, an increase of 163% in ten years, to undertake 23 again in early 2019.500 million Euro EPC project, business is progressing smoothly.After the completion of the Shaoxing production base, the company continues to expand the construction of the Hebei production base. The production base is expected to effectively meet the demand for prefabricated buildings in the 北京夜生活网 Beijing-Tianjin-Hebei region and the Xiong’an region, driving a rapid growth in business income.  Profit forecast We maintain the company’s profit forecast for 2019 and 2020 unchanged.  Estimates and recommendations The company currently reached 17 times P / E corresponding to 19 years.We maintain our recommendation. We are raising our target price by 5% to 4 due to the expected increase in liquidity easing.46 yuan, corresponding to 19 times 20 times P / E and 18% space.  The gross profit margin of risk steel structure business was lower than expected, and the technology franchise business expansion was lower than expected.