China Inspection Group (603060): High net profit deductions expected to benefit from restructuring of two materials

China Inspection Group (603060): High net profit deductions expected to benefit from restructuring of two materials

Deducting non-net profit increased rapidly, and profitability slightly replaced the company’s operating income in 19Q1.

09 billion yuan, an annual increase of 21.

15%; net profit attributable to mothers is 21.36 million yuan, a year-on-year increase of 9.

96%; net non-profit was 14.24 million yuan, an annual increase of 52.


The company plans to achieve operating income in 201911.

2.5 billion 天津夜网 yuan, an increase of 20% with a total profit of 2.

8.5 billion yuan, an increase of 19.


The company’s gross profit / net margin in 19Q1 was 36.

75% / 9.

97%, which changed by -0 in the same period of the previous 18 years.

43 / -1.

40 pct, company profitability improvement alternative.

The decline in profitability is expected to be due to the slightly lower profitability of the company’s recently acquired subsidiaries and increased competition in the testing industry.

In terms of cash flow, the company’s 19Q1 net operating cash flow was 15.67 million yuan. The net operating cash repayment for the previous 18 years increased by 8.01 million yuan, which was mainly due to the transfer of Sinoma Group’s claims to Sinoma Hong Kong in the current period, whichAdditional cash paid for other operating activities.

As of the end of 19Q1, the company’s asset-liability ratio was only 19.

31%, long-term low, and less pressure to repay debt.

Sinoma Group intends to transform 8 institutions into company operations and is expected to benefit from the reorganization of the two materials. According to the company’s announcement, before the company’s listing on November 9, 2016, the company’s actual controller, China National Building Materials Group, was working with the State-owned Assets Supervision and Administration Commission of the State Council, under the guidance ofSinoma Group plans a strategic restructuring plan.

If the reorganization is completed after the company’s first public shares, China Building Materials Group and Sinoma Group will stop operating competing businesses or replace competing businesses with the company’s operations within three years after the completion of the reorganization.Or transfer competing businesses to unaffiliated third parties to avoid competition with the company’s peers.

Recently, the company announced that the former Sinoma Group has the inspection and testing business qualifications and is directly or indirectly the same or similar business as the company and its holding subsidiaries, which constitutes a substantial industry competition of Sinoma Geological Engineering Exploration and Research Institute, Xianyang NonThe Metal Mine Research and Design Institute and other 8 institutions have adopted joint ventures to set up companies, increase capital holdings, purchase equity or purchase assets to transform their inspection and testing operations into company operations to resolve competition in the industry, and the company is expected to benefit from the reorganization of the two materials.

Outward mergers and acquisitions continue to accelerate, leading companies are expected to benefit from increased industry concentration. According to the company’s announcement, the company plans to increase capital in Zaozhuang Fangyuan with 14.14 million yuan in cash, accounting for 70% of equity in Zaozhuang Fangyuan.

A high-level cooperation framework agreement with the People’s Government of Zaozhuang City, the two sides jointly set up a subsidiary in Zaozhuang City, build a high-end comprehensive testing and certification base in the Huaihai Economic Zone, and actively promote the integration and reorganization of Zaozhuang testing and certification institutions.

The capital increase pioneer, Shandong inspection and certification market, also promoted a cross-regional strategic breakthrough.

In addition, according to the company’s annual report, the average annual growth rate of the consolidated income of the previous inspection and certification industry reached 15%, and the industry continued to develop steadily.

At the same time, the industry’s “small scattered weak” feature is still obvious. In the future, it will gradually concentrate on leading companies with brands and technologies, and the company will benefit from the increased concentration of the industry.

The company’s future outlook will continue to expand business scope through cross-regional and cross-industry mergers and acquisitions to achieve synergistic growth of endogenous and extension.

Earnings forecast and investment rating The company’s performance is rich in cash flow and the debt ratio is reduced. At the same time, the industry in which it is located is booming. The company has gradually achieved an orderly expansion through mergers and acquisitions. It is expected that the company’s 19-year revenue / performance growth will maintain rapid growth.

Regardless of the impact of the reorganization and integration of the two materials inspection and testing business, the company is expected to achieve net profit attributable to its mother in 19-21.



3.8 billion.

The company’s current PE (TTM) is 29 times, and the A-share survey and consulting service company estimates that it is about 33 times. The company’s forecast is lower than the industry average. We maintain the 30 yuan / share fair value judgment unchanged, which corresponds to 19 years of PE., Maintain “Buy” rating.

Risk warning: industry policy adjustments intensify competition, insufficient talents for business expansion, project progress is less than expected, and merger and acquisition integration risks.