Performance Review (5)

Xingfa Aluminum (00098)

Xingfa’s performance and dividends are as expected, and they are satisfied. The only dissatisfaction is the stock price performance.

Revenue increased by 37% to nearly RMB 10 billion, and gross profit increased by 33% to RMB 1.35 billion. The overall gross profit margin decreased slightly by 0.4% to 13.6%, mainly due to the 2% decrease in gross profit margin of construction aluminum profiles. By maintaining existing customers and attracting new customers, the processing costs were reduced, and the revenue of this business segment increased by 32%, and the price reduction achieved the expected results.

This year, 300 million RMB of Foshan Xingfa Building property sales accounted for the company’s contribution of 120 million yuan of gross profit, but the report did not provide data on after-tax profit contribution, I estimated that the after-tax profit contribution should be 30 million to 40 million yuan.

In 2018, the net profit reached 495 million yuan, the net profit per share was about 1.38 Hong Kong dollars, the current price-to-earnings ratio was 4 times; the dividend per share was maintained at 0.2 Hong Kong dollars, and the current dividend yield was 3.6%. The reason for the increase in earnings but the change in dividends is that it is completely understandable to reserve funds for the construction of new plants.

The biggest bright spot was the significant improvement in operating cash flow, from a net outflow of 47 million yuan in 2017 to a net inflow of 1.25 billion yuan this year. Therefore, the net debt dropped significantly from 1.74 billion in 2017 to 2018. At 1.05 billion yuan, the net gearing ratio dropped from 84% in 2017 to 42% in 2018.

It is expected that the company’s performance this year should remain stable and will continue to have property sales in Xingfa Building. However, after the new plant is officially put into operation in 2020, it is estimated that the business will be upgraded.

Tianjin Jin Burning Public (01265)

I did not take a closer look at the performance of Tianjin Jinpeng Public. I will look at the net asset value and whether it will pay dividends. As a result, the net asset value per share will increase to approximately HK$1.12, which means that if the equity is successfully transferred in the coming year, the price will not be Less than HK$1.12 and an unconditional offer to the minority shareholders at this price. The absence of dividends is also expected, and it is always necessary to make a valuation in the coming year. Therefore, it is a big premise to keep the assets as constant as possible. It is understandable.

The other one is more satisfied with the decrease in receivables, cash increase, book cash and financial assets totaling 1.27 billion yuan or about 0.8 yuan per share, which is almost equal to the stock price, and should have good resilience.

What this stock can do now is wait.