Daqin Railway (601006): Costs drag on performance debt properties remain strong

Daqin Railway (601006): Costs drag on performance debt properties remain strong

Incident Description The company released its semi-annual report for 2019 and achieved operating income of 402 in the first half of 2019.

700 million, five years growth.

9%; realized attributable net profit of 80.

400 million, down 3 every year.

7%.

Incident review demand weighed on the increase in the traffic volume of the Daqin Line, and the increase in shipments led to revenue growth.

In the first half of the year 1) Under the pressure of the improvement of the macro economy, the growth in demand for electricity was weak, and the squeeze effect of hydropower on thermal power was obvious, and the increase in demand for thermal coal was significant;Growth has negative feedback effects; 3) The adjustment of freight price marketization and competition among transportation companies have become normal. The impact of competing routes on the diversion of the Daqin Line has intensified. Under the influence of more than 3 aspects, the traffic volume of the Daqin Line dropped several times in the first half of the year.

2%.

However, the number of lines other than the Daqin Line (mainly for container lines) increased, and the company’s shipment volume increased in the first half of the year.

5%, driving operating income to grow by 5 per year.

9%.

Rigid cost growth has depressed gross margins, and index revenue has increased to hedge financial expenses.

On the cost side, the rigid costs represented by labor costs, depreciation, etc. continued to increase, while line usage fees increased rapidly with the increase in shipments, and the company’s operating costs increased by 8 in the first half of the year.

5%, leading to a decrease in gross profit margin by 1.

8 points.

On the expense side, the increase in bank deposits compared to the same period last year led to an increase in interest rate income, which has a significant hedging effect on financial expenses, and the company’s financial expenses decreased by 69 in the first half of the year.

2%.

At the same time, the profit of Shuohuang Railway maintained a steady growth, driving the company’s investment income to increase4.

3%.

The gross profit margin of Q2 was flat month-on-month, and the deductible cost item did not affect the increased expenditure.

Q2’s road network clearing arithmetic expenditures and revenues continued to decline sequentially, and the decline in expenditures increased or due to a more sequential decrease in shipments, resulting in a Q2 operating income growth rate of 2% decline.

2pct, but the cost of growth under the control of operating costs increased by a quarter-on-quarter rate of decline and gross profit margin were basically flat, the single-quarter gross profit growth rate turned positive.

However, due to the company’s force majeure costs, expenses and losses increased, Q2 increased profits by 2%.

Income tax expenses increased by 4%.

1%, a certain drag on the company’s performance.

Investment suggestion: Stable operating high-grade bonds still have configuration value.

Although the company is facing the adverse impact of pressure on coal demand and deepening of line competition, the company adopts flexible operating policies and strengthens cost control. At the same time, the company’s lines will still be a comparatively advantageous coal transportation channel in the long run, and the company’s operations are expected to continue to remain stable.

In addition, the company maintains a high percentage of dividends for long-term returns to shareholders, reflecting the high-dividend creditor attributes, and still has a certain allocation value.

Adjusted 2019-2021 forecast EPS to 0.

94, 0.

97, 0.

98 yuan, corresponding to 8, 8 and 8 times the PE, the latest forecast is expected to convert the company 6 to 2019-2021.

0%, 6.

1% and 6.

2%, maintain “Buy” rating.

Risk Warning: 1.

There is a large gradient in demand for thermal coal; 2.

After the opening of the Haoji Railway, the diversion effect 北京夜网 on the Daqin Line exceeded expectations.