Nengke (603859) Interim Review: Steady performance and significant cash flow improvement

Nengke (603859) Interim Review: Steady performance and significant cash flow improvement
Event: The company announced its semi-annual report. In the first half of 2019, the company realized operating income of 29,860.180,000 yuan, an increase of 82 over the same period last year.01%, realized operating profit of 4,031.07 million yuan, an increase of 270 over the same period last year.28%; net profit attributable to shareholders of listed companies was 3,181.09 million yuan, an increase of 158 over the same period last year.07%.  Opinion: Focus on smart manufacturing, steady growth in performance, and significantly improved cash flow.  Report the core company’s smart manufacturing business to achieve revenue 2.25 ppm, an increase of 230 in ten years.85%, revenue accounted for more than half, reaching 75.48%, the company’s business revenue structure has fully shifted to the main body of intelligent manufacturing industry software solutions.On April 11, 2019, the company completed the merger and acquisition of Lianhong Technology’s share registration. From the date of purchase to the end of the period, Lianhong Technology achieved operating income of 8,540.750,000 yuan, net profit attributable 杭州桑拿 to mother 918.350,000 yuan.Subverting the impact of Honghong Technology’s consolidation, the company achieved operating income2.1.3 billion, net profit attributable to mother was 2,262.750,000 yuan, an annual increase of 29.95%, 83.57%, the performance still maintained a steady growth, mainly due to the company’s smart manufacturing business team size and business capabilities have made great progress, the performance has shown good performance, while the company’s period expense ratio has decreased.At the same time, thanks to the company’s strengthening of accounts receivable management, increasing the collection of arrears, reporting a series of company sales of goods and providing cash inflows from labor services.590,000 yuan, an increase of 94 in ten years.84%, higher than the growth rate of revenue. At the same time, the company’s net cash flow from operating activities in the second quarter turned positive, and cash flow quotations improved significantly in the same period last year.  The merger and acquisition of Lianhong Technology was completed, and the synergy effect was initially shown.According to the preliminary report, the company completed the merger and acquisition of Lianhong Technology, which initially showed the synergy effect of the two parties in terms of technology, market and management.Lianhong Technology is an advantageous company in the PLM software field, and it is Siemens’ highest-level (platinum-level) solution partner. There are more than 2,000 existing customers. With the company in integrating product advantages, integrating customer resources, and taking advantage of the size of the R & D team,The potential for synergy is extremely high.The cascading macro technology efficiency doubling solution reported in the report has already cooperated with the company’s growing customers in the fields of aviation military industry, automotive and parts, transportation industry, power electronics industry, etc., with significant results.  The additional offering was approved, focusing on “product-life-cycle collaborative platforms based on digital alternatives” and “high-end manufacturing assembly system solutions” to provide key growth points for the intelligent manufacturing business.  In July 2019, the company’s public offering plan was approved. The fundraising projects include digital replacement projects and high-end manufacturing assembly system solution projects.The application of digital interconnected health technology in intelligent manufacturing involves the fields of product digital reorganization, production digital resetting, and running digital flipover. Relying on 5G Internet of Everything, Industrial Internet of Things, industrial big data and digital modeling and analysis, manufacturing enterprises are realized.Assist, guide, test, and verify product design and product production through virtual digitalization methods to achieve the perfect delivery of real products; high-end manufacturing assembly system solution projects are mainly based on high-end manufacturing industry’s classified assembly application solutions for research and development and implementation, to realize digital high-end industryThe new era of manufacturing has rich potential customers and a wide range of application scenarios in high-end manufacturing.The implementation of the two fund-raising projects will help the company to start the technical accumulation and research and development of various collaborative platforms and technical specialties around the product life cycle of manufacturing companies, which can effectively enhance the company’s core competitiveness in intelligent manufacturing industrial software. It is expected thatBecome the key growth point of the company’s intelligent manufacturing field.  The smart manufacturing overall solution provider has a clear strategy and expands the market’s proactive level.  The endogenous demand for domestic manufacturing transformation and upgrading is strong. National policies strongly support the intelligent manufacturing industry. Related technologies are constantly innovating and improving. The standard system is constantly being improved. Intelligent manufacturing companies are implementing lean manufacturing, agile manufacturing, and flexible manufacturing.Digital infiltration, digital factories and other modern intelligent business capabilities, gradually realize the vitality of industrial software, with huge market space.According to statistics from the Ministry of Industry and Information Technology, in 2018, industrial software products achieved revenues of 147.7 billion yuan, an increase of 14.At 2%, the Foresight Industry Research Institute predicts that the industrial software market size will reach USD 248.9 billion by 2022.  The company’s long-term research and development and practice in the field of intelligent manufacturing have accumulated and mastered many advanced technologies and system integration solutions. At the same time, it has also formed distinctive core products, which can provide customers with a complete set of intelligent manufacturing integration solutions.It can define a complete blueprint for the transition of intelligent manufacturing for users, and can also integrate the strength of the company and the ecosystem to help customers truly realize their transformation planning.The company customized exclusive digital, networked, and intelligent system solutions with industrial software as its core. The company has obtained a large number of customer recognition in the high-end equipment manufacturing industry, and has accumulated a wealth of high-quality customers. These customers are generally industries in their fieldThe leader has a high brand awareness and market influence. In its industry and region, it has established a good demonstration effect, which has laid a good foundation for the company’s market development potential. The merger and acquisition of Lianhong Technology further improved the company’s market in small and medium customers.Expansion capabilities of smart manufacturing integrated solution providers are emerging.Clear strategic layout and complete solution capabilities have expanded the company’s market advancement level in the field of intelligent manufacturing.  Company profit forecast and investment rating: The company has obvious technical barriers and customer resource advantages, and its long-term growth logic is clear. We expect the company to return to its mother net profit for 2019-2021 respectively.11, 1.56 and 2.12 trillion, the corresponding EPS is 0.73, 1.03 and 1.40 yuan.The current anniversary corresponds to a PE value of 32, 22 and 17 times for 2019-2021.Maintain the “Highly Recommended” rating.  Risk reminder: the risk of changes in relevant national policies; the company’s market expansion is less than expected.