In the evening of April 29, Luen Mei Quantum released 2019 annual report of high-quality growth trend and strong profitability. In 2019, driven by clean heat supply and high-speed rail digital media, the Company achieved operation revenue of 3.396 billion Yuan with a year-on-year growth rate of 11.83%. The net profit vested in shareholders of listed company was 1.592 billion Yuan with a year-on-year growth rate of 20.86%, the net profit subtracted by non-recurring profit and loss and vested in shareholders of listed company was 1.538 billion Yuan with a year-on-year growth rate of 35.82%, and the diluted EPS was 0.696 Yuan with a year-on-year growth rate of 20.87%.

It indicated strong sustainable growth ability and risk prevention ability under the background of trade friction and global economic slowdown.

The 2019 annual report demonstrated uniqueness of the Company in the A share market.

First, revenue and profit increased for consecutive 10 years. Luen Mei Quantum’s average annual growth rate of revenue reached 30% and net profit increased continuously in the past decade, indicating progressively increasing business scale, increasingly high market share and significant scale effect.

Then, profitability remained strong and stable. Luen Mei Quantum’s profitability was mainly manifested in high profit rate and stable ROA. According to 2019 financial report, net profit was about 1.645 billion Yuan, net profit rate was 48.4% and gross profit rate reached up to 54.62%, which was far beyond the industry average level.  

It was mainly because Luen Mei Quantum focused on technological innovation of heat supply and lowered production cost. For example, the Company improved production efficiency of fire coal through intensifying matching rate of boiler and coal type, reduced heat loss through delivering heat energy using insulated pipe network and realized control of heating network and utilization of low grade heating energy using heat supply network balancing technique. From the point of delicacy management, Luen Mei Quantum lowered the cost mainly through coal purchase at negotiated price and coal storage in slack season and achieved a high charge rate through household management. Besides, Luen Mei Quantum’s heat supply service area was mainly distributed in the new town construction area with a high level of energy conservation and environment protection, which further facilitated to achieve a high gross profit rate.

Meanwhile, Luen Mei Quantum achieved ROE of 23.67% with a chain growth rate of 6.19% in 2019. It was quite outstanding earning performance for such utility enterprises with great assets as Luen Mei Quantum and topped the list in the environmental protection industry. Moreover, average ROE exceeded 20% in recent three years, which further indicated mature business development and stable profitability of the Company.

Again, there was abundant cash in hand. Cash flow has always been a superiority of Luen Mei Quantum. In 2019, the Company achieved net cash flow of 1.438 billion Yuan with a year-on-year growth rate of 26.98%. It indicated high return rate, strong hematopoietic ability and strong sustainability of profit model. Furthermore, cash in hand was 5.07 billion Yuan within the report period, which not only made for “You are not nervous with surplus grain in hand” in the current economic climate, but also helped expand business by virtue of sufficient cash and purchase quality assets at low prices in order to enhance performance of listed companies.

Last, ratio of cash bonus was high. In the past year, the capital market fluctuated due to various adverse factors; while Luen Mei Quantum’s ROI remained relatively stable. As to share rise, shares nearly doubled (92.45%) from beginning to end of 2019 and surpassed the A share market. As to cash bonus, annual rate of cash bonus reached about 30% in the past three years and 30.19% in 2019. Based on general capital on December 31, 2019, it was planned to distribute cash bonus valued 2.10 Yuan (tax-inclusive) per 10 shares to all shareholders, adding up to about 481 million Yuan (tax-inclusive).

According to preliminary statistics, weighted average PE value of Wind power and heating power production and supply industries was about 23.4. According to Luen Mei Quantum’s closing price on April 29, 2020, total value was about 32.5 billion Yuan. Suppose net profit growth rate is 15% in 2020, estimated net profit is 1.831 billion Yuan and PE ratio is only 17.7. Subtracted by 5.07 billion Yuan, PE ratio is only 15.

In March, Luen Mei Quantum announced to include subsidiary Zhaoxun Media in the spin-off listing plan on GEM. Zhaoxun is a specialized operating company that engages in digital media of high-speed rail station at the earliest in China. Through more than 10 years of development, Zhaoxun Media’s advertising media network has covered 28 cities and had more than 500 signed sites. If spin-off listing succeeds, Zhaoxun Media can better raise the value and Luen Mei Quantum, the parent company, may rebuild the value.

（source：Securities Times）