Dongfang Yuhong (002271) Company Comments: Engineering Channel Continues to Massive, and Company’s Q3 Performance Continues High Growth

Dongfang Yuhong (002271) Company Comments: Engineering Channel Continues to Massive, and Company’s Q3 Performance Continues High Growth

Event: On October 28, the company announced the 2019Q3 quarterly report.

From Q1 to Q3 2019, the company achieved operating income of 128.

95 million, an increase of 38 per year.

64%; net profit attributable to mother 15 was achieved.

6.6 billion, an increase of 40 every year.


In Q3 2019, the company achieved operating income of 49.

87 ppm, an increase of 35 per year.

23%, achieving net profit attributable to mother 6.

50 ppm, an increase of 31 per year.


The continuous heavy volume of engineering channels, combined with the rapid growth of Deaiwei Coatings, led to the first three quarters of operating income of 38.

64% growth.

According to the report baseline, the Engineering and Construction Materials Group is forging ahead and rapidly expanding the size of the organization. The three regions of North, South and East China are established to quickly realize the effective integration of direct sales and engineering channels.% Growth rate; in terms of production capacity, the throughput of Luzhou, Laixi, Xianyang, Wuhu, Hangzhou and other places was gradually delivered in the first half of the year.

Therefore, the company’s operating income for the first three quarters reached 38.

64% growth.

From the perspective of cash flow, the surplus of monetary funds decreased by 65 compared with the end of last year.


Monetary capital surplus of the company in Q3 201916.

8.4 billion, a decrease of 65 from the beginning of the period.

32%, initially due to the increase in the company’s cash payment expenses during the period, the purchase of fixed assets, intangible assets and other long-term assets increased, the current period of repayment of expenses and distribution of dividends, profit or interest payment increased cash payments and performance bondTo; the balance of accounts receivable 65.

60 ppm, an increase of 45 from the beginning of the period.

43%, mainly due to the increase in income during the period resulting in an increase in accounts receivable; the balance of bills receivable15.

40 ppm, a decrease of 0 from the beginning of the period.

46%; closing balance of other receivables15.

91 trillion, an increase of 610 over the beginning of the period.

31%, mainly due to the increase in payment of performance bonds during the period.

The company’s quarterly consolidated gross profit margin in Q3 2019 was 36.

3%, down 1 from the previous month.

4%, increase by 0 every year.

2%; quarterly consolidated net margin is 13.

1%, down 2 from the previous month.

3%, a decline of 0 per year.


The scale effect drives sales, and the management (including R & D) expense ratio continues to fall, and the financial expense ratio rises.

Due to the increase in scale effect, the company’s sales expenses were reorganized in the first quarter to the third quarter of 201911.

9%, 0 in ten years.

2%; management expenses 7.2%, down by 1 every year.

9%; financial expenses increased due to the company’s increased leverage2.

4%, compared with 1 in the same period last year.


The company is deeply tied to high-quality downstream, and its production capacity + category expansion is renewed.

1) The company ‘s channel strength and capacity scale advantages continue to increase, which promotes the increase of urban occupancy and cost reduction capabilities: the company has gradually expanded its enhanced comprehensive competitiveness in recent years, continued to expand downstream customers, and has continued to have TOP10052 customers at the end of 2018.The 47 companies in 2017 had a significant growth, and the concentration of the waterproofing industry was low. There is still room for continuous improvement in the future. The company adjusted its channel layout and divided the three regional centers of North, East, and South China. It can better concentrate regional advantages to develop markets and improve.Operational efficiency; and through the company’s brand recognition and comprehensive competitiveness improvement, and customer requirements for products and comprehensive service quality continued to grow, the company’s bargaining power and cost capabilities have been significantly enhanced.

At the same time, the gradual expansion of the stock market will also become an important profit point for the company in the future.

2) Capital advantages 南京桑拿网 + capacity expansion to build barriers: The company’s convertible bonds raised funds are mainly used for capacity expansion, to enhance the country’s layout and perfection, and to quickly increase the capacity scale barriers and comprehensive service advantages. In the future, the trend of “collective mining”More benefit.

3) The development of the brand with “one yuan and multiple poles”, new categories expanded to increase new market space: the company continues to expand product categories, such as household coatings, insulation materials, diatom mud products, etc., making full use of the company’s brand and channel advantages, and is expected to passThe category expansion has grown into a giant building materials company.

Under the new normal, the company changed its business strategy, from a relatively extensive “high-speed” development to a sophisticated “high-quality” development, and entered a new stage of growth.

Historically, during the rapid expansion of the company’s real estate chain, the strategy of actively expanding the market and rapidly expanding production capacity has achieved important success; in recent years, the growth rate of the transformation industry has gradually declined, and the company’s price for maintaining the past revenue growth rate is operating.Quality and profitability are sacrificed to some extent.

In order to adapt to the development characteristics of the industry under the new normal, the company gradually adjusted its business strategy. In the future development, it will pay more attention to the quality of customers and projects, and ensure the security of accounts receivable and period.

The future revenue growth center may not be as high as it has been in history, but the anti-risk capability and quality of operations will improve.

We estimate the company’s net profit attributable to its parent to be 20 in 2019-2020.

7 and 26.

100 million, corresponding to PE of 16.

2 and 12.

8 times, maintaining the “overweight” level.

Risk reminder: Macroeconomic risks, changes in original growth, increase in accounts receivable or bad debt risk