Yingqu Technology (002925) Annual Report Commentary Report: E-cigarette Orders Affect Expected Results The company is expected to benefit from the listing process of IQOS in the United States in 19 years

Yingqu Technology (002925) Annual Report Commentary Report: E-cigarette Orders Affect Expected Results The company is expected to benefit from the listing process of IQOS in the United States in 19 years
Events: 1) The company released its 2018 annual report and achieved total operating income of 27 in 2018.79 trillion, down 14 a year.95%; realize net profit attributable to shareholders of listed companies.1.4 billion, a year-on-year decrease of 17.30%.2) The company intends to use 4.With 5.9 billion shares as the base, a cash dividend of 10 yuan will be distributed to all shareholders for every 10 shares.3) The company released the first quarter performance forecast. It is estimated that the net profit attributable to shareholders of listed companies in the first quarter of 19 would be 1.36-1.7.1 billion, a decline of 0-20% a year. Orders for e-cigarettes affect the company’s profit performance in 2018 and the first quarter of 2019, which are affected by destocking and product replacement by downstream customers, and the throughput of new products is still climbing. In 2018, the company’s e-cigarette parts orders increased significantly, thusAs a result, the company’s 佛山桑拿网 overall revenue and profitability have declined.Specifically, innovative consumer electronics achieved revenue in 201818.4.5 billion, a decrease of 22 a year.52%; The company’s gross profit margin in 2018 was 43.03%, 5 per year.91 points.According to the revenue and sales data of the innovative consumer electronics segment, we estimate that the revenue of e-cigarette parts will be about 40-50% around 2018 (gross profit margin remains stable), and the revenue of engraving machines and other components will increase by 30-40%.We believe that due to the high proportion of e-cigarettes in the company’s revenue and gross profit margin, the slender boots of this business affect the company’s overall revenue and profit levels.At the same time, or due to the decline in demand for downstream customers of e-cigarettes, and the new generation of product orders are still in the process of increasing production capacity and yield, Q1’s profit continued to be dragged down and performed poorly. Altria remains optimistic that IQOS will be listed in the United States this year. The company, as a supply chain company, tried to stabilize and rebound in 19 years. On February 20, Altria mentioned in the investor conference that the company is setting up IQOS offline physical retail stores in multiple cities in the United States, andSet up a marketing team to prepare for related activities in the United States.The company is very optimistic and expects that IQOS will pass the relevant FDA audit and certification in 2019.We believe that if IQOS passes the FDA review, IQOS sales are expected to reach a new high, and supply chain related companies are expected to benefit.Since the company cooperated with PMI in 2014, it has maintained a long-term and stable cooperative relationship with PMI and participated in IQOS 2.R & D and design of 4th and 3rd generation products.We believe that the new generation of products is gradually increasing, the US FDA may approve the listing, and the company’s product structure is continuously enriching and expanding. The company’s 19-year performance is expected to stabilize and recover. Profit forecast and investment advice According to the 2018 annual report, we fine-tune the company’s company revenue for 2019-20 to 33.97/42.6.6 billion (previous average 36.00/45.00 ppm) and a net profit of 9.06/11.9.5 billion (previous average 9).76/11.8.4 billion), the corresponding EPS is 1.98/2.61 yuan (previous average 2).13/2.58 yuan), considering that the company’s UDM model is unique and is expected to benefit from IQOS orders in the long run, its performance has grown steadily, maintaining a “buy” rating. Risk reminder: orders are less than expected, new suppliers join risks, FDA controls risks, new tobacco policy risks, trade war affects company order risks, exchange rate risks