Torch Electronics (603678) Financial Analysis Review: Healthy Financial Status Continues to Optimize the 杭州桑拿 Company’s Development Prospects

Foreword: The military industry chain has its special operating mode, which affects the financial indicators of listed companies in the industry. We combine the operating mode of the military industry and market concerns, torch electronics’ cash flow, inventory and other financial indicators and raised fundsUse the situation for analysis and compare it with peer companies.

Operating cash flow is relatively low, which is the upstream characteristic of the military industry. Torch Electronics’ operating net cash flow is less than net profit. The essence lies in the business model of the military industrial chain. As an upstream electronic component company, the company is located at the upstream of the product chain and downstream of the capital chain, So early delivery and late collection, resulting in cash flow always less than net profit.

In the same military military passive components business, AVIC Optics, Aerospace Electronics, Hongyuan Electronics, HTC Electronics, the ratio of operating net cash flow to net profit for the past 5 years is 49%, 86%, 44%, 18%, Torch ElectronicsFor 49.

4%, which is in the middle level of the industry.

Inventory calculation of agency business, the decline in the price of small torch electronics in 2018, the increase in inventory, the market is worried that a considerable part of the increase is the trading business inventory, 2019 civilian MLCC is expected to reduce prices, resulting in inventory price reduction.

We analyzed the company’s trading business inventory of about 300 million according to the company’s statement data. Under the most pessimistic assumption, impairment of inventory affects profits of 21.9 million yuan.

In 2019, we forecast the company’s overall net profit attributable to its parent to be 4.

3.5 billion, 21.9 million of the impact of the price decline is not significant.

The balance sheet structure is at the industry average level. From the perspective of the balance sheet structure, military passive component companies account for a relatively large amount of current assets in monetary funds, receivables, inventory, torch electronics monetary funds, the proportion of inventory and peer companiesBasically equivalent, the proportion of receivables is relatively small; the fixed assets and construction in progress of Torch Electronics in non-current assets are relatively large, mainly because the company has invested in new material projects; the company’s overall asset-liability ratio.

34%, the average division with peer companies.

In 2016, the company implemented an additional issue, raising funds to invest in special ceramic materials, and the total project investment was 8.

2.7 billion, of which 6 are fixed assets.

7.7 billion, the bottom of the working capital1.

500 million, the project construction period is 3 years.

As of the end of 2018, the amount of new material projects gradually transferred to 2 was 2.

12 trillion, and one more.

3.5 billion US dollars of assets under construction, 65% of the progress of the project. In addition to this, the company also had some fixed assets purchased directly. From the data point of view, the project’s fixed asset investment progress is consistent with the disclosed progress data.

Other risk exclusions: In terms of goodwill, related party transactions, and debt goodwill, the company’s 2019Q1 account has a goodwill of 2014 million yuan, which was formed by the acquisition of Tianji Electronics in 2018.Look, there is no risk of goodwill impairment.

In terms of related party transactions, the company purchases and sells goods, and provides and receives labor services. There are no related party transactions. There are only some leases, which are guaranteed related party transactions of subsidiaries.

In terms of debt, the company’s asset debt ratio is 23.

34%, current ratio and other solvency indicators are greater than 1.

Earnings forecast and investment 杭州桑拿 rating We believe that the company’s overall financial status is healthy, and financial indicators reflect the characteristics of the military electronics industry. These indicators are at a medium level among peers. It is expected that the company’s stable operation will continue to increase its future performance.

It is expected that the company’s net profit attributable to the parent in 2019-2021 will be 4 respectively.

3.5 billion, 5.

7.7 billion, 7.

4.5 billion, corresponding to PE is 25 times, 19 times, 15 times, maintaining the “buy” level.

Risk reminder: The construction progress of Liya chemical production line is less than expected; competition for civilian capacitors is becoming increasingly fierce.