Hengbang (002237) 2019 Interim Report Comments: Performance Exceeds Expectations, Optimistic for Continuous Growth of Gold Price in Second Half, Maintain Buy Rating

Hengbang (002237) 2019 Interim Report Comments: Performance Exceeds Expectations, Optimistic for Continuous Growth of Gold Price in Second Half, Maintain Buy Rating

Investment highlights: Net profit attributable to mothers has decreased year by year in the first half of 201942.

02%, lower than expected.

In the first half of 2019, listed companies achieved operating income of 129.

880,000 yuan, up 23 before.

62%; net profit attributable to shareholders of listed companies1.

46 trillion, down 42 a year.

02%, corresponding to a basic income of 0.

16 yuan, of which the non-net profit attributable to shareholders of the listed company1 is realized.

0.6 billion, down 57 every year.

34%, lower than expected.

In the second quarter, the company realized sales revenue.

32 ppm, an increase of 21 from the previous month.

8%, achieve net profit attributable to mother 0.

3.7 billion, down 65.

The 73% increase in gold price is difficult to resist the drag on the increase in output, and the decrease in gross profit margin as a whole dragged down net profit more than expected.

In the report scale, the company’s sales revenue increased due to the increase in trade income (the initial budget size was about 40 trillion), and the operating income after excluding trade income decreased by 15

8%, mainly due to the overhaul of two of the three main production lines in this period, affecting the decline in the output of major products.

We see that the company’s gold business only achieved sales revenue in the first half of the year38.

69 ppm, a decrease of 7 per year.

86% (the average price of SHFE gold in the first half of the year was 289.

Calculated at 52 yuan / gram, the gold sales volume was 13.

36 tons, compared with the sales data of the same period last year15.

33 tons fell by 12 in ten years.

85%), the sales income of the remaining electrolytic copper, silver and electrolytic lead respectively decreased by 13.

11%, 16.

15% and 17.


Relatively speaking, in the first half of 2019, the company’s sales of rare small metals (antimony, bismuth, selenium, etc.) reached 1.

62 ppm, an increase of 96 in ten years.

54% is a bright spot in business.

The decline in production is compounded by the increase in the company’s low gross profit margin trading business (the Shanghai and Hong Kong trading companies were established in 2018), which caused the company’s overall gross profit margin to decline.

86 up to 5.

16%, together with the decline in sales revenue, has caused the company’s net profit growth to exceed expectations!

In addition, the report indicates that the average half-year tax rate shown by the company is close to 25%, which is mainly affected by deferred income tax expenses and previous annual income expenses. The company’s average comprehensive rate of return is between 18% and 19% (considering that some subsidiaries do not apply 15% Of new business tax rate).

After overhaul, production capacity is expected to resume as scheduled, and gold 南京桑拿网 prices will continue to strengthen.

We believe the company’s short-term performance fluctuated and was affected by the suspension of production and maintenance.

With the completion of the maintenance, the company’s production has returned to normal in July, and we believe that the company’s profit level can be restored to at least the first quarter of 2019 in the future.
At the same time, the price of product gold has strengthened significantly since mid-June, which will benefit the company’s second half performance.
We believe that the spread on the yield on US 2-year 10-year Treasury bonds is still too small or sometimes inverted, which means that the yield on 2-year Treasury bonds will fall significantly in the future, which will help the gold price strengthen in the future.

Bullish on 3-6 months COMEX gold price rising to 1600-1800 USD / GBP!

Reduce earnings forecast and maintain BUY rating!

Due to the company’s overhaul in the second quarter, the overall output exceeded expectations, but the continued rise in gold prices in the second half of the year will replace some of the impact.

Therefore, we lower our 2019-2021 net profit forecast to 3.



86 trillion (previous forecast was 4.



6.4 billion), the current sustainable corresponding PE in 2019 is 42.

0X; Considering that the subsequent strong price of gold will bring the market’s upward earnings expectations to the company, we still maintain the company’s buy rating!