This report is read as follows:
Haili's high growth in the first half of the year comes from the high production and sales of household air conditioners, and the price increase in the middle of the year is conducive to the improvement of gross profit margin in the second half of the year. Profit margin flexibility, 2011-2013 EPS 0.37 yuan, 0.46 yuan and 0.56 yuan, given a "neutral" rating.
Main points of investment
In the first half of 2011, Haili achieved a total operating income of 1.798 billion yuan, an increase of 42.1% over the same period last year. The total profit was 243 million yuan, with a net profit of 146 million yuan, up 56.8% and 74.5% respectively. The income per share is 0.24 yuan. The growth of profit is faster than that of income, which is due to the increase of investment income, the decrease of tax rate and the decrease of profit and loss rate of minority shareholders.
High production and sales of household air conditioners drive growth, and domestic sales prices are on the rise. The revenue of air-conditioning compressors was 4.861 billion yuan, an increase of 49.0 percent over the same period last year, and sales of 11.24 million units were up 32.3 percent over the same period last year. Domestic sales totaled 4.077 billion yuan and exports totaled 784 million yuan, up 60.3% and 8.2% respectively over the same period last year. Domestic sales of 9.44 million units increased by 38.7 per cent year-on-year, corresponding to a 30 per cent year-on-year increase in air conditioning production in the first half of the year. The average domestic price per unit increased by 15.6% compared with the same period last year, mainly due to the improvement of product structure (10H1 is mainly level 4 or 5 energy efficiency products, 11H1 is mainly high energy efficiency and frequency conversion) and cost rise.
Rising costs affect gross profit margin and are expected to pick up in the second half of the year. The comprehensive gross profit margin was 12.2%, down 1.9 percentage points from the same period last year. The gross profit margin of domestic sales of compressors is about 12.9%, down 3.5% from the same period last year, while the gross profit margin of export is 4.6%, an increase of 0.6%. The average domestic price of 11H1 compressors is only 5 yuan higher than that of 10H2, and the price of the frequency conversion compressor industry has increased by about 20% from June to July. Even if the price is reduced as a result of the recent rare earth correction, the gross profit margin will improve in the second half of the year.
Cost control is excellent, and the decline in expense rate is due to high income growth. During the period, the expense rate decreased by 1.9 points to 7.4%, and the cost increment mainly came from interest payments, wages and transportation costs. Due to the stripping of Shanghai Kona (refrigerator compressor), the investment income increased by 23.15 million yuan compared with the same period last year.
The receivable payable matches the inventory growth rate and the scale growth rate, and the operating cash flow is normally tight; investing in fund-raising projects in advance leads to an increase in borrowing and interest expenses. The proposed non-public offering is intended to expand production of 2 million small fluorine-free compressors and L-series compressors, and is applying for exemption from the obligation of tender offer. The new product heat pump water heater is booming, and the new energy vehicle electric compressor is waiting for mass production.
We predict that the company's EPS from 2011 to 2013 will be 0.37 yuan, 0.46 yuan and 0.56 yuan respectively, and the IPO will be diluted by about 10%. Compared with other air conditioning parts manufacturers, the current net interest rate of 4.0% is still low and has more flexibility. Consider the level of valuation and give it a "neutral" rating.
