Hengli Hydraulics (601100): Interim report results in line with expected pump valve volume + new business development will stabilize the industry cycle

Hengli Hydraulics (601100): Interim report results in line with expected pump valve volume + new business development will stabilize the industry cycle

Event: The company achieved revenue of 27 in 2019H1.

900 million (previously +29.

1%); net profit attributable to mother 6.

7 ‰ (+44 for ten years.

7%), deducting non-attributed net profit 6.

300 million (previously +49.


Among them, Q2 achieved revenue of 12 in a single quarter.

200 million, previously +2.

6%, net profit attributable to mother 3.

400 million, previously +12.

3%, the growth rate slowed down.

Key points of investment: Revenue: The oil tank business is expected to remain stable, and Zonda Pump Valves has started to fully increase the revenue of excavator cylinders.

300 million, accounting for 44%, ten years + 25%, and still maintains rapid growth under the high base of 2018.

From January to June 2019, the sales volume of excavators in developing countries was 13.

70,000 units, an increase of 14% each year, of which the company sells a total of 25 hydraulic cylinders for excavators.

60,000, a 13% increase in ten years.

The company’s overall production schedule is basically stable, with a slight increase 8 months ago. It is expected that the sales volume of excavator cylinders will remain stable in the second half of the year.

Non-standard cylinder income 6.

300 million, accounting for 23%, ten years + 8%; a total of 7 sales.

90,000, a year-on-year increase of 18%, mainly because the 2019H1 non-standard production line is still occupied by the excavator cylinders to occupy part of the production capacity, affecting the production and sales of non-standard cylinders.

The increase in sales of pump valves of the subsidiary Hydraulic Technology (mainly hydraulic pump valves) resulted in a 100% increase in revenue6.

400 million (compared with 3 in the same period in 2018).


On the basis of maintaining a high share of small-dig pump valves, the company has also installed large-scale and large-volume pump valves in the middle of the main force of major OEMs, and its market share has increased month by month.

Casting branch sintering quantity 1.

In August, + 30% per year, to achieve income 2.

300 million a year + 21%.

The second phase of the casting project invested in 2018, the first production line has been completed and 佛山桑拿网 trial production has begun, and the operation is in good condition; the other production line is expected to be installed and completed by the end of September 2019 and trial production in October.

It is expected that the casting capacity will reach 5 by the end of 2019.

5 nominal.

Profit side: scale effect + optimization of product structure, profitability significantly increased H1 comprehensive gross profit margin by 37%, and then +2.

4pct; net interest rate is 24%, ten years +2.

6pct; weighted ROE 14.

5% + 3pct per year.

Among them, Q2’s single quarter gross margin was 39.

9%, net margin 28.

2%, the highest point since 2013.The company’s significant improvement in profitability is mainly due to the following: 1) The scale effect and product structure optimization brought about by the pump valve volume 南京夜网论坛 increase significantly increase the overall gross profit margin.

2) The period expense ratio is reduced by 8.

7%, one year -1.

1pct (sales expense ratio 1.

7%, management expenses (including research and development expenses) rate 7.

5%, financial expense ratio -0.

5%, respectively -0 per year.

5 points, -0.

1 point, -0.


We believe that the company’s profitability is expected to further improve through the continued volume expansion of CUHK’s pump valves.

In addition, the company generated 23.25 million exchange gains and losses in the first half of the year, and 18.2 million government subsidies included in the current profit and loss. Therefore, non-recurring gains and losses in the first half of the year reached 40.9 million.

The single operating net cash flow reached a record high and the operating capacity remained good: H1’s operating net cash flow.

900 million, previously + 313%, of which Q2 single quarter reached 6.

400 million, a record high.

Accounts receivable turnover days decreased from 46 days in the same period last year to 35 days; inventory turnover days decreased from 108 days in the same period last year to 104 days; shortening of the business cycle, and good repayment should respond to the company’s sales of goods in the first half of the yearThe cash received from providing labor services reached 2.4 billion, and the cash flow situation became more healthy.

Excavator pump valve volume + new business non-standard pump valve, the motor will smooth the transformation of the industry into H1 company R & D investment 1.

200 million, accounting for total revenue of 4.

At 2%, the company ‘s annual R & D investment accounts for about 4% of its total revenue. Through the rapid expansion of its revenue scale, R & D investment has also continued to increase.

Continued high R & D investment has built a deep moat for the company, enabling its pump valve business and non-standard oil cylinders, hydraulic motors and other businesses to develop smoothly.

In the first half of the year, the company’s medium and large digging pump valves have been fully supported by the main forces of major OEMs, and their market share has increased month by month.

For non-excavator pump valves, pumps for high-altitude operation trucks have begun to be supplied in large quantities to high-end customers at home and abroad; additional new batches of supporting products such as truck cranes and pump trucks have been put on the market to provide new growth momentum for the future.

In addition, the 6-50T slewing motors for excavators, which were fully developed by Hydraulic Technology, were restored in small batches at the OEM.

The continuous development of business + customers will help the company break through the industry cycle and have higher performance flexibility in copyright.

Earnings forecast and investment grade: We expect the company’s net profit for 2019-2021 to be 12.

3, 15, 17.

500 million, corresponding to PE is 21/17 / 14X, given a “buy” rating.

Risk warning: downside risks in the industry cycle; new business expansion is less than expected.