Tielong Logistics (600125) Covers for the First Time-Special Box Returns Extend Long-term Profit of Shatuo

Tielong Logistics (600125) Covers for the First Time-Special Box Returns Extend Long-term Profit of Shatuo
This report reads: The pricing distortion of different types of goods in China’s railway freight transportation, and the decrease in the turnover rate of railway containers, have inhibited the long-term profitability of the special container business.Fortunately, the company’s early expansion of the Shaying line business provided support for profitability. Investment points: 1.Covered for the first time, rated “Neutral”.The passenger transport business of Tielong Logistics gradually withdrew and the Shalong Railway and special container business became core businesses.The Shaying Railway has a transformation with the bulk cargo transportation and is currently at a cyclical high.The profit of the special container business continued to increase, but was limited by the freight pricing policy and turnover rate, and its contribution to long-term shareholder returns was limited.The 2019-21 EPS is predicted to be 0.37/0.38/0.40 yuan, 15 times PE in 2019, 1.3 times the PB estimate, given a target price of 5.77 yuan, rated as “neutral”. 杭州夜生活网 2. The special container business has long been constrained by railway freight pricing policies and declining turnover.Compared with coal railway transportation, the demand for special container railway transportation is one-way, with exceptional exceptions, lower turnover rates, and higher freight rates to replace it.The railway container freight rate is not expected to reflect the difference in turnover rate.Restrictions on pricing and turnover make it difficult for the company to merge into the hard work of a given business and turn it into a higher shareholder return. 3. Shaying Railway has become a core business that contributes to shareholder returns and gradually provides profit support.The company acquired Yingkou Port’s only railway sparse port in 2005—14.The 17-km-long Shaying Railway has been expanded twice with a total 杭州桑拿网 investment of 5.400000000.In the past 14 years, it has obtained 5 times the return on investment.This business is affected by the cycle of macroeconomic and commodity demand, and its cyclical properties are significant. Currently, it has clearly echoed from the 2016 cycle trough. In 2019, this business will still benefit from the transit iron, but it will still be reflected in the long-term impact of commodities. 4. The scale of processing trade business is limited, and the core lies in risk control.With the implementation of the horizontal supply reform in 2016-17, the scale of the company’s processing trade business has expanded, and its gross profit has reached 17%.The profit margin of the trading business is low and it needs to be driven by working capital. The company’s annual report clearly states that it will control operating risks. It is expected that the business scale will maintain a low growth rate. 5. Risk factors.Demand for special containers was lower than expected; macroeconomic fluctuations; bad debts in trading business.