China Hercules (002896): The turning point in the fourth quarter of 2019 appears to benefit from the rebound in industrial automation demand

China Hercules (002896): The turning point in the fourth quarter of 2019 appears to benefit from the rebound in industrial 佛山桑拿网 automation demand

Event: The company released the 2019 annual report notice, and actually realized a net profit of 50-62.5 million yuan, a year-on-year decrease of 14.

2% -31.


  The overall performance has improved, mainly due to the decrease in product adjustments and the decrease in gross profit: the company achieved a net profit of 50-62.5 million yuan in 2019, a decrease of 14.

2% -31.


The company expanded its product development efforts, deeply explored customer needs, and achieved the company’s overall business goals. At the same time, in order to expand market space and improve equipment utilization, the company proactively adjusted its product structure and gradually adjusted it, leading to a decline in gross profit margins of major products in 2019.Profitability has improved.

  The key points of the fourth quarter of 2019’s performance appeared, benefiting from the rebound in industrial automation demand: the company’s main products are geared motors and reducers, and downstream industries include food, packaging, textile, electronics, medical and other special machinery and equipment, industrial robots, intelligent logistics,New energy, working machine, etc.
Beginning in the second half of 2018, affected by domestic deleveraging and external Sino-US trade frictions, demand for the industrial automation industry has weakened.

As demand in downstream industries picks up, the company will maintain rapid growth in logistics, photovoltaic and other industries, and new products such as precision reducers and RV reducers will also accelerate volume.

It is estimated that the net profit in the single quarter of 2019Q4 will be 15.48 million yuan to 28.98 million yuan, an increase from the same period of the previous year, and the company’s performance inflection point has arrived.

  Affected by the improvement of the internal and external macro environment, the demand for industrial automation will gradually pick up: due to the domestic shift from deleveraging to steady leverage, tax cuts and fees will increase corporate profits, and external Sino-US trade frictions will ease, and corporate investment confidence will improveThe impact of environmental improvement has led to a rebound in manufacturing capital expansion.

According to the manufacturing PMI index released by the Bureau of Statistics, it rose to 50 on November 12, 2019.

2. Return to the above line.

In addition, domestic industrial robot production resumed positive growth starting in October 2019, releasing a signal that industry demand has bottomed out.

With the growth of the state’s support for the real economy, especially the manufacturing industry, we judge that the depressed industrial automation demand in the early stage will gradually pick up.

According to our grassroots research, the current 3C industry, 5G base stations, auto parts and other automation needs have recovered, and related companies have already placed orders.

  Profit forecast and investment recommendations: We estimate the company’s net profit for 2019-2021 will be 56.68 million, 92.95 million and 1 respectively.

2.8 billion, corresponding to 34 times, 20 times and 15 times the corresponding PE, maintaining the “buy” level.

  Risk warning: Manufacturing capital expenditure rebounds less than expected