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1、Deutsche Bank Markets Research Rating Hold Asia China Industrials Manufacturing Company Yuanda China Date 18 April 2013 Recommendation Change A painstaking year of remedy ahead; downgrading to Hold Reuters Bloomberg Exchange Ticker 2789.HK 2789 HK HKG 2789 Forecasts And Ratios Year End Dec 31 2011A
2、2012A2013E2014E2015E Sales (CNYm) 10,797.0 11,844.612,708.714,108.715,624.7 EBITDA (CNYm) 1,285.7 625.6728.4941.61,135.6 Reported NPAT (CNYm) 850.3 438.5488.6617.8776.9 DB EPS FD(CNY) 0.16 0.070.080.100.13 % Change 0.0% -48.4%-52.3%-50.9%-42.2% DB EPS growth (%) -18.6 -54.711.426.425.8 PER (x) 6.5 1
3、0.57.55.94.7 EV/EBITDA (x) 3.9 6.94.83.93.4 Yield (net) (%) 3.7 5.46.07.69.6 Source: Deutsche Bank estimates, company data Margin recovery tougher than expected - not just cyclicality _ Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its research repo
4、rts. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MI
5、CA(P) 054/04/2013. Price at 18 Apr 2013 (HKD) 0.74 Price target - 12mth (HKD) 0.69 52-week range (HKD) 1.07 - 0.64 HANG SENG INDEX 21,570 Vivian Hao Research Analyst (+852) 2203 6241 Key changes Rating Buy to Hold Price target 1.20 to 0.69 -42.5% Sales (FYE) 12,876 to 12,709 -1.3% Op prof margin (F
6、YE) 9.4 to 5.2 -45.0% Net profit (FYE) 901.1 to 488.6 -45.8% Price/price relative 0.4 0.8 1.2 1.6 2.0 5/1111/115/1211/12 Yuanda China HANG SENG INDEX (Rebased) Performance (%) 1m3m12m Absolute -6.3-26.0-30.8 HANG SENG INDEX -2.3-8.63.8 Despite a gradual warm-up of the global construction market, we
7、reduce our top-line and earnings estimates for Yuanda by a big margin on 1) lukewarm new order and backlog growth in light of more conservative corporate growth strategy, 2) continued margin drag and cash collection issue from overseas projects (30% of backlog and revenues in FY12), and 3) managemen
8、ts oversight on project management and risk control. With no signs of a clear margin recovery in the near term and substantial remedial work to be done, we downgrade Yuanda from Buy to Hold and halve our target price to HK$0.69. Lukewarm order book and backlog growth to continue in FY13E We tweak do
9、wn our net revenue marginally by 1.3% for FY13E in light of Yuandas more conservative bidding strategy, which is likely to lead to tepid growth in backlog and new contracts. During FY12, Yuandas backlog/new orders grew by merely 8%/7% YoY in cf. 20%/23% YoY in FY11. We expect only a 4% YoY growth in
10、 new orders and low-mid teen YoY growth in backlog for FY13 with management expecting a strategic pull-back. Earnings growth hurt by continued overseas margin drag We lower our GM forecasts for FY13/14E by 2.7ppt/3.5ppt against a much slower margin recovery outlook while management just started to f
11、ocus on strengthening internal control by 4Q12. We believe Yuandas overseas segment margins (GM 1315%) will continue to be a big drag to the group (GM 16.5% in FY12) due to 1) continuing project duration extension amidst project owner funding issues in the Middle East and Europe, 2) difficulty in ma
12、naging labor-related on-site costs as a foreign contractor. Further, Yuandas NIM was lowered by 3.2ppt/3.9ppt to 3.8%/4.4% for FY13/14E due to higher borrowings needs to fund the near-term working capital requirements. Lower target price to HK$0.69 (almost halved) and downgrade to Hold; risks We set
13、 the new target price at HK$0.69 (previous HK$1.20), based on 7x fwd P/E FY13E (previous 6x P/E FY13E) , which is in line with its current trading P/E and a 15% discount to the China construction peer avg. of 8x, on Yuandas less promising outlook. Downside risks: project-delay-led cost overrun. Upsi
14、de: new orders. 18 April 2013 Manufacturing Yuanda China Page 2 Deutsche Bank AG/Hong Kong Model updated:17 April 2013 Running the numbers Asia China Manufacturing Yuanda China Reuters: 2789.HK Bloomberg: 2789 HK Hold Price (18 Apr 13) HKD 0.74 Target Price HKD 0.69 52 Week range HKD 0.64 - 1.07 Mar
15、ket Cap (m) HKDm 4,037 USDm 520 Company Profile Yuanda China is a leading manufacturer of curtain walls in China. The company provides one-stop solutions for curtain wall systems with a focus on commercial and public facilities. Its main international markets include the United Arab Emirates, UK, Au
16、stralia and USA. Price Performance 0.4 0.8 1.2 1.6 2.0 May 11Aug 11Nov 11Feb 12May 12Aug 12Nov 12Feb 13 Yuanda ChinaHANG SENG INDEX (Rebased) Margin Trends 4 6 8 10 12 14 10111213E14E15E EBITDA MarginEBIT Margin Growth as a result, the recommendations may differ and the price targets and estimates o
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