The hottest dynamic research of zhongyeda; industr

Dynamic research of zhongyeda: industrial electrical heating up e-commerce platform empowerment

key investment points:

manufacturing boom helps industrial control rebound, and the low-voltage electrical appliance industry accelerates under the completion cycle. At present, China and the United States have basically reached the first stage trade agreement, and trade frictions have been alleviated. It is expected that export-oriented manufacturing orders will stabilize and rebound. In November, the official manufacturing PMI reached 50.2, up 0.9pct month on month (MOM) from October, and returned to above the dry and prosperous line again after a year. In December, the PMI remained at 50.2, better than expected. The confidence of the manufacturing industry was boosted, and the willingness to expand production and increase inventory was enhanced. The central bank's RRR reduction brought about a reduction in the financing costs of small and micro enterprises and private enterprises, which is expected to lead to a rebound in capital expenditure in the manufacturing industry, which is good for the industrial control industry

the completed area of the house has continued to grow positively since August, of which the completed area in a single month in October increased by 19% year-on-year, and the growth rate in a single month in November narrowed. This is mainly due to the high base in the same period last year. Low voltage electrical appliances belong to the post real estate cycle variety, and this round of completion cycle is expected to continue, thus driving the low-voltage electrical appliance industry to accelerate upward

the strong growth of e-commerce platforms breaks the growth bottleneck and brings growth beyond the industry. The company is the leader of industrial electrical distribution. In 2019, the industrial electrical market was depressed, and most listed companies of industrial control and low-voltage electrical appliances had flat performance, with some showing negative growth. In the first three quarters, the company achieved a revenue of 7.2 billion yuan, a year-on-year increase of 14.4%, and the net profit attributable to the parent company was 220 million yuan, a year-on-year increase of 16%, mainly due to the sharp increase in the revenue of the company's e-commerce platform zhongyeda mall. In 2018, zhongyeda mall achieved a revenue of 1.71 billion yuan, 2 coke and coking coal were strong, 2.3 billion yuan in the first three quarters of 019, and the annual revenue in 2019 is expected to be more than 3 billion yuan, an increase of about 75% year-on-year

zhongyeda mall has laid out the end customer long tail market and MRO (non production raw material industrial products) market. After several years of cultivation, it has entered a high growth stage. It will break the traditional growth mode of relying on increasing marketing personnel and points of sale in the past, cooperate with the company's offline warehousing, logistics and inventory to improve the coverage of small and medium-sized customers and scattered markets, and bring growth beyond the industry. It is expected that with the recovery of industrial electrical industry, the performance flexibility of the company will gradually appear

3+1 network and team are the core competitiveness of the company. 3+1 network refers to distribution, logistics, technical services and interconnection. 1) Distribution: the company has a perfect sales network, through 54 subsidiaries and more than 120 offices, sinking and expanding the third and fourth tier cities to provide comprehensive services for customers across the country; 2) Logistics: the company has effectively shortened the supply cycle of products through 8 logistics centers and 50 logistics distribution transit warehouses covering core cities across the country; 3) Technical service: through the application of information system and the establishment of service management system, the company provides customers with pre-sales technical support, industry solutions, personnel training, after-sales technical services, etc., and gradually promotes the response to customer service needs; Fixture, strain measurement and safety performance differentiation development of other competitors

3+1 team refers to power distribution team, industrial control team, small and medium-sized customer team and technical service team

the power distribution and industrial control team focuses on core end customers such as OEM. The small and medium-sized customer team realizes the coverage of fragmented market through online and offline combination. The technical service team provides industrial application solutions to customers in emerging industries, so it is a value-added service for general laboratory machine manufacturers. The company realizes the comprehensive coverage strategy of industries, products and regions through effective collaboration and empowerment among teams. It is expected that the large volume of e-commerce platforms will lead the company to the road of increasing market share

the company has entered the stage of trend growth in profit margin. In recent years, the company has continuously expanded its industrial control team and introduced new brands such as Phoenix Contact and Advantech. With the gradual increase of brands, the company can focus on products with higher gross profit margin in the sales process, and the overall gross profit margin of the company is expected to increase. At the same time, with the company's e-commerce platform revenue volume, the synergy of 3+1 network and team will bring about a decline in the overall cost rate, and it is expected that the company's net profit rate will enter a trend growth channel

the company helps Tesla build a super charging network. The company focuses on the charging system required by commercial vehicles and develops megawatt pre installed charging stations. At present, it can provide complete charging network solutions and products for social charging equipment manufacturers, investment operators and end customers. At present, the company has sold nearly 40 sets of charging stations and operated 4 sets, covering more than 10 cities across the country. It can cover all aspects from providing products to providing solutions and operations. The company cooperates with Tesla to set up the first super charging station in East Guangdong of Tesla. The company will continue to develop the charging pile and charging station business in combination with the actual market situation, and obtain returns with the help of industrial development

profit forecast and investment rating: Based on the performance of the first three quarters of 2019, we slightly lowered the profit forecast. It is estimated that the annual net profit of the company will be 256/324/408 million yuan respectively, and the corresponding PE will be 16/13/10 times respectively. We believe that 1) the industrial control and low-voltage electrical appliances market is about to pick up; 2) E-commerce platforms increase their coverage of small and medium-sized customers and scattered markets, bringing growth beyond the industry; 3) The profit margin of the company has entered the trend growth channel. 4) Cooperating with Tesla to build the first super charging station in eastern Guangdong will benefit from the rapid development of the industry in the future. Maintain the buy rating

risk tips: the demand for low-voltage electrical appliances and industrial control is less than expected; The bargaining power of the industry is less than expected; The development of e-commerce business is less than expected; Systemic risk of the market