CSSC Defense (600685) 2018 Annual Report Comments: Relocation of production area affects gross profit margin, and non-recurring gains and losses drag down performance

The company released its 2018 annual report: the report consolidated revenue to achieve 192.

1.4 billion yuan, an annual decrease of 16.

17%; net profit attributable to mother -18.

690,000 yuan, -0 from the previous year.

51 ‰ decreased by 18.

1.9 billion; net profit after deduction is -17.

5.8 billion, up from -10 the 无锡桑拿网 previous year.

3.6 billion reduction 7.

2.1 billion.

Reporting information, the company’s shipbuilding business achieved operating income of 150.

75 ppm, a reduction of 16 per year.

34%, first of all, was the previous expectation of the acceptance of partial ship orders. The large number of first-built ships with short production preparation time and the relocation of the holding company’s Guangzhou Shipyard International Factory adversely affected shipbuilding production.

The company’s offshore engineering business realized operating income14.

32 trillion, a reduction of 33 a year.

39%; operating income from ship modification and conversion business9.

8 million yuan, an increase of 6 in ten years.

97%.

In 2018, the company’s non-recurring profit and loss-1.

11 trillion, compared with 11 in the same period last year.

24 megabits reduced by 12.

35 trillion, the overall gross profit margin is -0.

25%, compared to 6 in the same period last year.

12% reduction of 6.

37% is the first reason that leads to the maximum reduction of the company’s net profit.

In 2018, the company’s two major shipyards performed poorly.

GSI achieved net profit of -10.

5.7 billion, -0 from the same period last year.

32 trillion minus 10.

25 ppm; Huangpu Wenchong achieved a net profit of -10.

63 ppm, compared with 0 in the same period last year.

22 trillion minus 10.

8.5 billion.

The report summarizes that the company dated 9 investors including Huarong Ruitong to implement market-oriented debt-to-equity swaps and increased capital of USD 2.4 billion each to the company’s wholly-owned subsidiaries Guangchuan International and Huangpu Wenchong, greatly reducing the company’s debt ratio and helping the company cross the industryThe downturn and the potential for follow-up business development have a better foundation.

According to the latest financial report, we adjusted our profit forecast and expect the company to EPS0 for 2018-2020.

06/0.

07/0.

09 yuan / share, corresponding to an estimated 286/239/193 times (2019/03/22), maintaining the rating of “prudent increase”.

Risk Tips: Shipbuilding Industry Continues Downturn; Military Procurement Transition