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Hengli Hydraulics (601100): Performance Exceeds Expectation

Hengli Hydraulics (601100): Performance Exceeds Expectation

A brief evaluation of the performance of Hengli Hydraulics in 2018 achieved operating income42.

11 ppm, +50 throughout the year.

65%, net profit 8.

37 ppm, +119 throughout the year.

05%; 15 in the first quarter of 2019.

69 ppm, +61 throughout the year.

63%, net profit 3.

26 ppm, +108 throughout the year.

13%.

The company’s first quarter performance income and performance exceeded market expectations.

Operating analysis The company’s performance doubled, revenue and profitability indicators increased significantly, and cash flow improved significantly.

1) The performance is beautiful and the profitability has been significantly improved. The quarterly report exceeded market expectations.

2018 results +119.

05%, return on net assets 19.

94% (ten years +9.

55ppt), operating cash flow for ten years + 418%; first quarter of 2019 results increase +108.

13%, the prosperity continues; 2) the reasons for the increase in performance: 1) the increase in product sales, the rapid growth in revenue from excavator cylinders, non-standard cylinders, and pump valves for small excavators;+3.

80ppt; 3) Operational efficiency is improved, and the sales expense ratio and management expense ratio totaled -1.

82ppt.

The company, as a leader in the localization of hydraulic parts, is expected to benefit from the continued prosperity and concentration of excavators.

1) Construction machinery maintained a high business climate. In the first quarter, the sales volume of excavators hit a record high, leading the company’s advantages.

Excavator sales from January to March 7.

480,000 units, an annual increase of 25%; single month sales in March 4.

430,000 units, an increase of 16% per year, and the monthly sales volume reached a record high.

The share of leading cities such as Sany Heavy Industry has steadily increased; 2) As the domestic leader of hydraulic components, the company’s customers are mainly Sany Heavy Industry, Xugong Machinery and other industry leaders, which will benefit the 重庆耍耍网 industry’s prosperity and concentration.

R & D and innovation drive the company’s future growth, and we look forward to the large volume of digging pump valves and continuous development of non-digging pump valves.

1) In 2018, the company independently researched and developed the second-generation excavator sub 15t main control pump valve to achieve comprehensive large-scale matching, Zhongda excavator pump valve made breakthrough progress, supporting dozens of volumes at the end of the year; 2) The company expanded to expand non-Pumps for the excavator sector add new impetus to growth.

In addition, the company announced that it will increase the intensity of outreach mergers and acquisitions, and seek to continuously integrate international high-quality hydraulic resources.

Profit adjustment and investment recommendations Consider the company’s breakthrough in the development of large and medium-sized pump valves. Expected heavy volume, superimposed on the continued prosperity of construction machinery, raised profit forecast (+ 25%), and return to net profit attributable to mothers in 2019-2021.

6/15.

2/17.

90,000 yuan, giving 27 times PE in 2019, raising the target price to 38.

5 yuan.

Risks prompt sharp changes in sales of excavators; pump and valve product sales fall short of expectations; and raw material prices change sharply.