Daqin Railway (601006) Interim Report Comments: Poor Performance Meets Expected Demand, Slows Traffic Volume
In the first half of the year, revenue increased by 5 per year.
86%, profit is reduced by 3 every year.
74%, performance in line with expectations On August 28, Daqin Railway released its 2019 Interim Report: 1) Based on the restatement statement, revenue growth increased by 5.
86%, net profit attributable to mother decreased by 3.
74%; 2) Calculated according to the previous statement, income increased by 8.
15%, earnings decreased by 1.
85%; 3) Interim results are slightly higher than our profit forecast1.
The main reasons for the decline in profit are: 1) weak demand for thermal coal; 2) high inventory and enthusiasm for purchasing;
We expect the EPS for 2019-2021 to be zero.
91 yuan, maintaining a target price of 8.
20 yuan and “overweight” grade.
The demand for downstream coal is not good. The traffic volume of the Daqin Line slightly decreased in the first half of the year.
85% (measured by unreported statements), mainly due to the shift in freight volume of the Daqin Line.
From January to June, the freight volume of the Daqin Line decreased by 3 every year.
17%; average daily traffic is 120.
55 inches, less than full load 3.
This is mainly due to the weak demand for thermal power, dragged down by higher upstream inventory.
In the first half of the year, the country ‘s thermal power generation capacity only increased slightly by 0 each year.
2%, while hydropower increased by 11.
The daily coal consumption of the six major power plants along the coast dropped by 8.
7%; its average coal inventory reached 1,605 tons, which is 29% higher than the same period last year.
In terms of competition structure, the Mongolian-Jilin line quickly increased capacity and lowered the freight rate in the second quarter, which had a diversion effect on the Inner Mongolian supply of the Daqin line.
(Data source: Wind) The spread of financial expenses decreased. Shuohuang Company’s contribution during the period of prominent decline in expenses and increase in investment income. Tanggang Company’s consolidation has a positive effect on profitability.
In 1H19, the company’s period expenses decreased by 8.
70%, of which sales, management (including R & D), financial expenses decreased by 520, 270, 31 million yuan; investment income continued to increase4.
31%, of which Shuohuang Company’s investment income increased by 64.64 million yuan; Tangang Company consolidated at the end of 2018 and contributed about 1 net profit in 1H19.
9.2 billion yuan.
However, these positive pulls are not as effective as the staggered migration of the Daqin line.
The first season is not busy, and the demand growth trend may continue into the second half of July-August. The daily power consumption of downstream power plants is weaker than that of the same period last year, and the daily coal consumption of the six major power plants continues to decline.
In the first half of August, the coal import volume of the Qingang Railway decreased by 17.
69% was mainly affected by the rush repair of Qingang power supply cables and Typhoon Lima.
At present, the annual inventory is at least basically flat.
On August 28, the inventory of the six major power plants was 1,641 long, 122 positions higher than the same period last year; their coal availability days were about 21 days, and then 1.
8 days; Qingang inventory is 598 tons, 24 fewer than the same period last year.
In the early season, the coal market is not busy, and it is included in the clean energy squeeze and environmental protection policy constraints. We judge that the trend of coal transportation demand may 南宁桑拿 continue.
(Data source Wind) The Menghua Railway is about to open, and the pressure of line competition is gradually showing that Xi’an Bureau and Hohhot Bureau have reduced their freight rates in 2Q19. The Menghua Line is expected to open in 4Q19 (according to the Shanxi Provincial Department of Transportation)Competitive pressure is gradually emerging.
We expect the Daqin Line to carry 4 in 2019/20/21.
4.5 billion tons.
Based on the interim report, we slightly adjusted the net profit attributable to mother to 137 in 2019/20/21.
6.5 billion (previous 137.
Estimate basis 9.
0x 2019PE unchanged, maintain target price of 8.
Assume that the dividend rate for 2019-2021 is the same as for 2018 (49.
06%), the dividend yield 成都桑拿网 is expected to be 5.
80% (based on the closing price of 8/28/2019).
Maintain the “overweight” rating.
Risk reminder: The economy is going down fast, the railway transportation capacity of Mongolia, Hebei and Japan is accelerated, and the highway governance is relaxed.