Zhenhua Technology (000733): Subsidiary’s statement to boost profitability in the first three quarters of return to the mother deducted non-net profit + 29%

Zhenhua Technology (000733): Subsidiary’s statement to boost profitability in the first three quarters of return to the mother deducted non-net profit + 29%

Event: The results of the third quarter report were announced. The subsidiary’s revenue after the statement was -30%, and the net profit of the subsidiary was deducted + 29%. On the evening of October 30, the company released the third quarter report, and the first three quarter revenue was 29.

98 ppm, at least -30.

23%, due to Shenzhen Communications no longer consolidated since May 19; operating costs of ten years -47.

06%. Reasons: ① Shenzhen Communication is no longer consolidated. ② Through the adjustment of product structure, the company’s low value-added business decreased and the proportion of high value-added business increased.

Return to mother deducted non-net profit 2.

35 ppm, +28 a year.

97%; single quarter revenue 8.

25 trillion, ten years -35.

32%, non-net profit attributable to the mother is 0.

51 ppm, +34 for ten years.


In addition, the company’s fair value change income was 2712 million, -38 per year.

96%, mainly due to the impact of changes in the fair value of investment real estate.

In 2019, the company’s measurement model for investment real estate was changed from cost method measurement to fair value measurement. Due to this, the net profit attributable to the parent in Q1-Q3 increased by 27.61 million yuan in 1919, and the net profit gradually returned to the parent in Q1-Q3 in 18increase.
41.24 million yuan.

Net profit before return to mother +15 per year.

55%, after excluding the impact of this event, the net profit attributable to the parent for each reporting period is +25.


Shenzhen Subsidiary, a subsidiary of the company, 苏州桑拿网 has intensively concentrated its main components business. Accounts receivable / prepaid accounts have grown rapidly in recent years. On April 29, Shanghai and Germany, another shareholder of the joint venture Shenzhen Communications, increased capital.

In order to gather resources and focus on the development of core electronic industries with new electronic components, Zhenhua Technology decided to not increase investment in Shenzhen Telecom (main mobile phone foundry) and abandon control of Shenzhen Telecom.

After the completion of the capital increase, the company’s shareholding in Shenzhen Communication is 49%. Shenzhen Communication is no longer consolidated and is included in long-term equity investment based on the equity method. Its profit may be reflected in the investment income items of the income statement.

At 杭州夜网论坛 the end of the reporting period, there were 4 long-term equity investments.

57 trillion, earlier +50.


In addition, the company has filed a complaint with the Shenzhen Intermediate People’s Court for the debt contract owed by the associate company Shenzhen Communications to the company.

Accounts receivable at the end of Q324.

19 trillion, +58 from the beginning of the year.

66%, mainly due to the increase in component sales from January to September. The company is a key domestic manufacturer of electronic components. Components are at the upstream of the industrial chain, and the repayment is mainly at the end of the year.

Q3’s net operating cash flow was -2.

72 ppm, previously -985%, the final company cash flow is expected to improve significantly.

Q3 advance payment 1.

50,000 yuan, +60 from the beginning of the year.

69%, mainly due to the purchase of materials and equipment by some subsidiaries, prepayment for materials and equipment.

We believe that the company’s main business of electronic components is continuously promoting transformation and upgrading. After the final disposal of this subsidiary is completed, the future performance of the company is expected to continue to develop well in the long term.

Profit forecast and investment advice: The company is a listed company of China Electronics Group Corporation, and it is a key enterprise in the production of electronic components in China. It mainly develops, manufactures and sells military electronic information products. Alternative products include chip capacitors, chip resistors / inductors / twoNew electronic components such as triodes and thick-film hybrid integrated circuits are at the advanced level of similar domestic products in terms of performance, quality and market share.

It is expected that the impact of the subsidiary’s statement on the company’s short-term revenue will adjust the revenue growth rate from -16% / 13% / 30% to -28.

7% / 7.

47% / 20.
6%, 19-21 year revenue from 44.


0 is lowered to 38.



300 million, net profit attributable to mother from 3.



75 down to 3.



0 million, EPS is 0.



98 yuan / share, P / E is 26.



7x, maintain BUY rating.

Risk reminder: The timing of the recognition of military component income is uncertain, the risk of repayment of arrears of Shenzhen Communication, and the risk of Shenzhen Communication as a long-term equity investment loss.