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Weifu Hi-Tech (000581): Asset impairment affects profit and environmental protection upgrade benefits in the long run

26/03/2020

Weifu Hi-Tech (000581): Asset impairment affects profit and environmental protection 杭州夜网论坛 upgrade benefits in the long run

Event: The company released its 2018 annual report. In 2018, the company achieved operating income of 87.

22 ppm, 10-year average3.

28%; net profit attributable to mothers23.

96 ppm, with a ten-year average of 6.

82%.

The performance of associates grew steadily, and asset impairment affected profits.

(1) The company’s investment income is the main source of profit. The company’s investment income in 2018 was 19.

560,000 yuan, of which investment income from joint ventures is 16.

2.4 billion, mainly contributed by Bosch Automobile Diesel and Zoomlion Electronics.

In 2018, Bosch Automobile Diesel (holding 32 shares.

5%), Zhonglian Electronics (holding 20%) has a net profit of 35.

4.5 billion, 18.

34 ppm, a 10-year increase3.

63%, 3.

21%, solid performance growth.

(2) The company accrued part-time loss of assets in 20182.

51 ppm (1 last year.

1.9 billion), to a certain extent, affected the current profit.

The country ‘s triple-truck truck has increased governance and the boom cycle has been extended.

(1) In the “Action Plan for Fighting Toughships in the Treatment of Pollution by Diesel Trucks,” it was explicitly proposed that the implementation of the National Sixth Emission Standard will be implemented in advance in July 29 this year within the four provinces and 29 cities of the key regions.

In the “Three-year Action Plan for Winning the Defense of the Blue Sky”, the country will eliminate more than one million heavy trucks of the national three and below before the end of 2020.

Against this background, the subsidy standards for the elimination of national triple-cards will be increased in many places this year, and supporting measures will be adopted to limit time and time.

(2) According to our calculations, currently there are about 1.7-1.8 million national triple trucks in urgent need of elimination.

Taking into account that on July 1, 2021, the nationwide implementation of heavy trucks nationwide a, the cycle of heavy truck boom is expected to be extended.

Environmental protection upgrade is a long-term trend, and multiple businesses continue to benefit.

1) The company’s core business, the fuel injection system business, and the joint venture Bosch Automotive Diesel Business are all highly related to heavy truck sales.

Heavy trucks are the top priority of environmental protection supervision. The adoption of the national triple truck governance will continue to increase, and the company will continue to benefit.

2) Through the gradual upgrading of truck emission standards, in order to achieve the national standard after the national five and six national standards, multiple systems are needed.

The post-processing part requires the cooperation of multiple technologies. EGR + DOC + DPF + SCR has become a mainstream solution abroad. The company’s diesel engine post-processing business will increase the value of bicycles.

The company’s gasoline catalyst products have now entered the joint venture brand procurement system, and the passenger vehicle business has a lot of room for expansion in the future.

Good financial position and actively promote business transformation.

The company established a merger and acquisition fund in June 2016 to conduct investment, mergers and acquisitions, industrial resource integration and other businesses, and reserve merger and acquisition projects.

In March 2018, the company plans to purchase Protean’s Series E preferred 合肥夜网 shares for $ 30 million, and the company will hold Protean12.

34% of the shares.

In March 2019, the company intends to buy 66% of Danish fuel cell components company IRD 66 million euros.

The company’s financial status is good and it provides strong support for promoting business transformation.

Earnings forecast: We expect the company’s net profit for 2019/2020/2021 to be 24.

53/26.09/27.

03 trillion, corresponding to EPS 2.

43/2.

59/2.

68 yuan, given “overweight” rating.

Risk warnings: The national triple-three-phase truck was eliminated less than expected; emission standards were implemented less than expected; outbound M & A failed to meet expectations; passenger car customer expansion was less than expected.