Donggang shares (002117): Q2 results are slightly under pressure and expected to increase in the long term
[Event]Donggang released its semi-annual report for 2019 and achieved revenue of 8.
49 ppm, an increase of ten years.
41%, net profit attributable to mothers1.
42 ppm, a ten-year increase of 7.
61%, an increase of 5 in the next ten years.
Among them, Q1 revenue / net profit grows by 8 per year.
16% / 17北京夜网.
56%, second quarter revenue / net profit breakdown twice a year.
97% / 0.
Performance was basically in line with expectations.
[Comment]1) Revenue is stable and technical service business is under pressure.
①The income of traditional printing products increases by 0 every year.
56%. Although the industry is shrinking and shutting down partly prevents product lines, the company maintains customer stickiness and guarantees stable revenue.
② The revenue of covered products increased by 21 each year.
85%, of which smart cards increased by 32%, social security cards and bank cards were invested in the market on a large scale, and the trend is expected to continue.
③ Revenue from technical services decreased by 13 year-on-year.
91%, of which the annual growth of the archival business is 12%, the further development of the customer base, the growth of the electronic ticket business by 22%, the development of non-tax bills has progressed, the lottery business has improved, the main department’s bidding and settlement cycle changes, but it is expected that the whole yearmore than a year.
2) Profitability is picking up.
① The overall gross profit margin increased by 1.
0pct to 39.
Among them, the traditional printing gross margin decreased by 0.
3pct, although the price of raw materials has fallen, the proportion of low-margin products has increased slightly, which has stabilized profits; the gross profit margin of covered products has increased.
3pct, the profitability of technical services also continued to increase, mainly due to business development to increase capacity utilization and release of scale effects.
② The expense ratio remained stable during the period, and the R & D expense ratio decreased by 0.
6pct, mainly due to the expansion of dilutive expenses, is expected to continue the trend.
3) Future highlights: The main printing industry benefits from customer development + product upgrades. It is expected that the revenue will be stable and the control costs will improve profitability. Smart cards will continue to expand into the market and are expected to maintain high growth. E-tickets are the general trend, and the blockchain will improve its profitMode; the archival storage service group continued to expand, and gross profit improved under the scale effect; terminal lottery accelerated in the second half of the year, and it is expected to maintain a two-digit growth.
In addition, the subsidiary Donggang Ruiyun intends to reform the joint-stock system and apply for listing on the science and technology board to expand financing channels.
4) Investment rating: We estimate Donggang’s net profit for 2019-2021 3.
9.9 billion yuan, corresponding to PE of 19.
The company’s traditional main business is stable, the new business contributes flexibility, and the dividends are attractive. It is recommended. Risk warning: Bill printing industry shrinks sharply, new business launches fall short of expectations