Incidents:
FAW Jiefang released its 2021 interim report: In the first half of 2021, the company achieved revenue of 78.60 billion yuan, an increase of 14.20% over the previous year; achieved net profit of 3.269 billion yuan, an increase of 52.06% over the previous year; achieved net profit of 3.156 billion yuan after deduction of the non-return mother, an increase of 153.30% over the previous year; basic earnings per share were 0.70 yuan, an increase of 51.09% over the previous year; and ROE (dilution) 12.77%.
Key points of investment:
Improved corporate governance promoted increased profitability, increased net profit margin of sales by 4.16%, increased 1.09pct's integrated reforms, comprehensively established cost baselines, strict rigid cost control, carried out full-life cycle revenue management, deepened target cost management, and continued cost reduction and cost reduction. In January 2021, the company's sales expense ratio was 1.67%, a year-on-year decrease of 0.46 pct; the management expense ratio was 2.98%, a year-on-year decrease of 0.35 pct; net operating cash flow was 15.526 billion yuan, an increase of 7.04 billion yuan over the previous year.
In the era of comprehensive China 6, the in-depth expansion of the company's industrial chain will be the key to improving profitability. Affected by rising raw material prices and increased market competition, etc. In 2021, the gross margin of the company's products was 8.25%, a year-on-year decrease of 1.03 pct. However, the company actively laid out upstream and downstream of the industrial chain, pioneered new business models, and strengthened investment in technology research and development. There is room for future product gross margin to pick up.
Looking at the increase in internal parts support ratio and post-market development in the short to medium term: the company added 30,000 units of heavy diesel engine production capacity. The complexity of Country 6 products has increased, and the company is exploring aftermarket businesses such as spare parts, maintenance, and insurance. Among them, the Jiefang Bank app has reached 1.7 million users, and Tianjin Fujie has achieved revenue of 1.152 billion yuan.
Looking at the implementation of the company's “Columbus Smart Logistics” strategy in the medium to long term: In July 2021, the company released the smart power domain brand, which relies on vehicle networking, big data, and algorithms to provide users with exclusive scenario solutions. The company's positioning as a smart transportation solution provider will open up space for future growth.
Profit forecasting
We expect the company's net profit from 21 to 22 to 44.09 billion yuan, or 5.187 billion yuan. In 2023, with the launch of new business, the company's revenue and net profit are expected to rise steadily, reaching 121,922 billion yuan and 6.136 billion yuan respectively. Maintain an “increase in holdings” rating.
Risk warning
The improvement in corporate governance fell short of expectations, market demand fell short of expectations, the risk of raw material price increases, post-market business expansion fell short of expectations, and the progress of intelligent product development fell short of expectations.