Main points of investment
The pressure on gross profit margin led to a loss of 211 million yuan for the whole year, which was lower than expected. In 2016, the company achieved operating income of 1.7 billion yuan, an increase of 51.15% over the same period last year, net profit of-211 million yuan, down 2935.11% from the same period last year, and gross profit margin of 5.64%, down 5.75% from the same period last year. Among them, 4Q realized operating income of 432 million yuan, down 14.68% from the same period last year; net profit was-92 million yuan, down 2043.54% from the same period last year; and gross profit margin was 6.14%, 1.37% lower than the same period last year. Net profit loss in 2016 was lower than expected. The main reason for the company's loss is the large expenditure and R & D investment during the period, the large-scale production of new capacity has not yet led to high fixed amortization and a sharp decline in gross profit margin.
The number of orders for power batteries on hand has increased and the performance will improve in 2017. Hunan Keba, a subsidiary, is expected to start mass production in 2017, and has received orders for 85000 sets of power batteries in 2017 and 112800 sets in 2018. Colemei will provide batteries for Toyota to start production. will increase the increase in the number of power battery sets for vehicles. Profitability is expected to improve in 2017.
The production capacity of the matching models of the hybrid power system has been improved, laying the foundation for performance reversal. The carbon emission system planned to be implemented in 2018 will force traditional cars to transform into energy-efficient vehicles. The company has the advantages of perfect industrial chain from raw materials to hybrid powertrain system (HEV, PHEV, EV). In 2016, the company's hybrid system is in trial production, with a total sales of about 680 sets of powertrain, the pulling effect on performance has not yet been shown.
It is expected that starting from 2017, with the gradual release of production and sales of Geely Dihao EC7 hybrid models (data from the passenger Federation: 70 EC7 hybrid models sold in January and 110vehicles in February 2017), and two new supporting models, the supply volume of hybrid platform CHS will increase significantly, laying a good foundation for the company's performance reversal and is expected to bring greater flexibility.
Investment suggestion: our company forecasts earnings per share of 0.02 yuan, 0.03 yuan and 0.04 yuan respectively from 2017 to 2019. The ROE is 1.7%, 2.7% and 4.0% respectively, maintaining the buy-An investment recommendation, with a six-month target price of 13.3 yuan, equivalent to a market capitalization of 18.5 billion in 2017.
Risk hint: sales growth of matching hybrid models fell short of expectations; the price of battery raw materials rose sharply.
