Tianneng (819 HK) Robust 2020N Results Beat Consensus Again May 12, 2021 203

PSR Recommendation: BUY Status: Maintained
Target Price: HKDHKD18.00

Investment Summary
FY2020 Results Grew Strongly, with Revenue Up by Nearly 50%, beat expectations Again
Tianneng Power reported a sales revenue of RMB53.5 billion in 2020, a year-on-year
increase of 32%; the profit attributable to shareholders stood at RMB2.5 billion, a year-onyear increase of 47%. Basic earnings per share were RMB2.20. The proposed final dividend
was HK$0.4 per share. The dividend payout ratio reached approximately 15%.
Gross Margin in Manufacturing Industry Increased and Expenses Were Well Controlled
The gross profit was RMB5,492 million with a gross margin of 10.26% during the reporting
period. There was an increase of 17% and a fall of 1.3 ppts Y-o-Y, respectively. Due to the
higher proportion of the trading business with lower gross margin, the overall gross margin
has declined compared with 2019. Excluding the trading business, the gross margin of the
manufacturing industry increased by 1.7 ppts to 17.1%. The overall battery business
witnessed an increase in the gross margin, mainly due to the scale effect brought about by
sales increase and the decrease in raw material prices.
The period expense ratio (sales + administration + R&D) decreased by approximately 1 ppt
to 5.6%. This was mainly because the expenses were diluted due to rapid revenue growth.
At the end of the reporting period, the asset-liability ratio fell by 2.93 ppts, and the ROE
increased by 2.7 ppts to 29.9%.

About the author

Profile photo of Zhang Jing

Zhang Jing
Phillip Securities (HK)

Bachelor Degree in Tongji University of Engineering; Master Degree in East China Normal University of finance. Currently covering the automobile and air sectors. She has years of experience in investment research and is good at combining analysis for the companies with industry prospects.

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