The company achieved revenue of 8.5 billion yuan in the first half of 2021, + 23.4% of the same period last year, and net profit of 648 million yuan, + 100.3% of the same period last year. The net profit of the company was within the range of previous performance forecasts, in line with market expectations. Of this total, revenue in the second quarter of 2021 was 4.165 billion yuan, + 0.4% year-on-year, and net profit was 409 million yuan, + 68.5% year-on-year. At the same time, the company's non-public stock offering plan has been approved by the CSRC. If the issue is successful, it will help to straighten out the company's equity, promote the unity of the interests of large and small shareholders, and is expected to promote the company's valuation repair.
We maintain the company's annual EPS forecast of RMB 1.87ax 2.14 in 2021-22-23, taking into account the world-leading competitiveness of the company's automotive interior and metal products and the quality of its customers; steady progress in European business restructuring and continuous loss reduction, which is expected to usher in valuation restructuring, giving the company a 2021 15xPE valuation, a target price of 28 yuan and a "buy" rating.
The company's reported results are within the scope of the previous forecast and are in line with market expectations. The company achieved revenue of 8.5 billion yuan in the first half of 2021, + 23.4% of the same period last year, and net profit of 648 million yuan, + 100.3% of the same period last year. The net profit of the company was within the range of previous performance forecasts, in line with market expectations. Of this total, revenue in the second quarter of 2021 was 4.165 billion yuan, + 0.4% year-on-year, and net profit was 409 million yuan, + 68.5% year-on-year. In the case of lack of core and low prosperity in the industry, the company's performance in the second quarter still increased significantly compared with the previous quarter, except for the equity investment income of about 75.77 million yuan in FAW Fuo. mainly due to the company's good customer structure and the smooth progress of the European restructuring plan, the business rebounded steadily.
The company's 2021Q2 gross profit margin is under pressure and the expense rate has declined. In the second quarter of 2021, the company's gross profit margin was 18.1%, year-on-year-1.1pcts, month-on-month-0.5pct, mainly due to the lack of core in the automotive industry, the output of core customers such as FAW-Volkswagen and SAIC-Volkswagen declined, and the prices of all kinds of raw materials increased in varying degrees. The company's second-quarter expense rate is 7.8%, year-on-year-3.7pcts, month-on-year-2.5pcts, of which sales expense rate is 0.1%, year-on-year-2.5pcts, mainly due to the reclassification of transportation fees according to income criteria; management expense rate is 4.2%, year-on-year-2.1pcts; R & D expense rate is 3.4%, year-on-year + 0.3pct; mainly due to the increase in new technologies and projects in the current period, leading to a further increase in R & D investment The financial expense rate is 0.2%, compared with-0.5% in the same period last year.
Tesla, Inc. matching continues to improve, thermoforming business continues to volume. The company's interior accessories business takes a two-pronged approach both at home and abroad: in terms of domestic business, the joint venture company Sheng Weidehe Huaxiang currently supplies rearview mirror products of Model 3 models made in Tesla, Inc. Shanghai Super Factory. In terms of overseas business, Northern engraving, a subsidiary of Lawrence Interior Decoration, a wholly owned subsidiary of the company, cooperated with Tesla, Inc. in North America, supporting Model X, Model S aluminum ornaments and other products.
It is expected that as a supplier in Tesla, Inc. 's global supporting system, the company will have the opportunity to obtain more products in its core interior product business area in the follow-up Model Y model. At the same time, the subsidiary Changchun Huaxiang thermoforming business is deeply equipped with FAW-Volkswagen, and the products have high added value. During the reporting period, FAW-Toyota and other new customers are expanded, and the follow-up growth is expected.
The loss of the European business continues to decline, which is bound to show confidence in the development. Since 2014, German Huaxiang has continuously suffered large losses; in 2020, the company reached a layoff compensation agreement with local German trade unions, and planned to close its major factories in Germany and agreed to lay off staff; the relevant restructuring work has been basically completed in the first half of 2021. German Huaxiang will strive to build into a global market order center and innovative R & D headquarters, and the main factory will be relocated to low-cost countries such as Romania. In the first half of 2021, Germany's Huaxiang lost 40 million yuan, a big improvement compared with the same period last year (190 million yuan). At the same time, the fixed increase plan of the company's major shareholders has been approved by the CSRC. If the issue is successful, it will help to straighten out the company's equity and promote the unity of the interests of large and small shareholders. Germany's Huaxiang to reduce losses and major shareholders are expected to promote the company's valuation repair.
Risk factors: global car sales are not as expected; overseas business restructuring is not as expected; the progress of additional issuance projects is not as expected; Tesla, Inc. 's supporting expansion is not as expected.
Investment suggestion: the company is a high-quality supplier of global excellent automotive interior and exterior decoration and metal parts, supporting mainstream customers such as Tesla, Inc., Volkswagen, Mercedes-Benz and BMW; the new business thermoforming metal parts production line has reached production and contributed to the performance. We maintain the company's annual EPS forecast of RMB 1.87ax 2.14 in 2021-22-23, taking into account the world-leading competitiveness of the company's automotive interior and metal products and the quality of its customers; steady progress in European business restructuring and continuous loss reduction, which is expected to usher in valuation restructuring, giving the company a 2021 15xPE valuation, a target price of 28 yuan and a "buy" rating.
