Dongfeng shares (601515): 2018 performance increased by 14.

7% concerned about progress in pharmaceutical packaging and industrial marijuana

Dongfeng shares (601515): 2018 performance increased by 14.

7% concerned about progress in pharmaceutical packaging and industrial marijuana

The 2018 results were slightly higher than the expected 2018 results announced by Dongfeng: operating income33.

28 ppm, an increase of 18 in ten years.

76%; net profit attributable to parent company 7.

48 ppm, an increase of 14 in ten years.

69%, corresponding to a profit of 0.

67 yuan, slightly higher than our expectations.

By quarter, Q1 / Q2 / Q3 / Q4 revenue increased by +7 twice.

4% / + 14.

0% / + 9.

2% / + 45.

6%, net profit attributable to mothers increases by +3 each year.武汉夜网论坛

1% /-2.

8% /-17.

0% / + 89.

8%, the fourth quarter performance improved significantly, due to increased investment income.

At the same time, the company announced a price of 2.

Acquired 75% equity of Guizhou Chiba, a pharmaceutical packaging company (43X in 18 years, 29X for pro forma) for US $ 5.9 billion, and plans to issue convertible bonds as the source of funds for the equity acquisition.

Development trend 1. The main business of cigarette labels is steadily improving, and the non-smoking label business is rapidly increasing.

1) Tobacco label main business: conventional revenue 27.

580,000 yuan, an increase of 13 in ten years.

59%, mainly benefited from the rapid growth of the industry’s “small, medium and short burst” tobacco innovation category and the company’s export of tobacco label business; 2) Non-smoking label business: the growth of dairy product revenue increased by 169.

84%, which is due to the improvement of production and operation efficiency of Australian dairy factories and the development of internal sales channels in China; the revenue of non-smoking standard consumer business increased by 137.

29%, benefiting from the social packaging and printing production base in the southwestern region officially started operation; PET base film and functional film product revenue increased 42.

02%, affected by the overall market improvement and product quality and brand enhancement, external sales increased rapidly.

2. The profitability of production cost growth is under pressure in 2018.

The company’s gross profit margin in 2018 fell by ten years.

24ppt, mainly due to the increase in raw materials, rising labor costs and green energy expenditure expectations; during the period, the expense ratio fell by 0.

94ppt, the cost control ability has been strengthened.

3. Pay attention to the progress of mergers and acquisitions in the pharmaceutical package industry and industrial cannabis business.

1) The company acquired Guizhou Chiba Fatli Pharmaceutical Packaging to broaden its downstream industry; 2) The joint-stock company Yunnan Hanxin Fatli industrial cannabis market has a synergistic effect with the heating and non-burning smoking utensil business, and observes the subsequent application of new products in the field of tobacco.

Earnings forecast is based on a pick-up in downstream industries, raising 2019 / 20e earnings forecast by 6% / 5% to 0.


75 yuan / share.

Estimates and recommendations currently correspond to 19 / 20e 15.


1x P / E.Maintain recommendation level and raise target price by 9% to 12 based on profit forecast.

9 yuan, corresponding to 20e 17.

2x P / E, 22% upside.

Risks Price fluctuations of raw materials; increased industry competition; policy risks.