Main points of investment
Event: the company announced third-quarter results, with revenue of 1.77 billion yuan in the first three quarters of 2016, an increase of 116.2% over the same period last year; net profit of 71.79 million yuan, up 92.7%; investment income of 61.17 million yuan, up 134.8% over the same period last year; gross margin 11.2%, net profit 4.1%. Of this total, revenue in the third quarter was 570 million yuan, up 170.8 percent over the same period last year; net profit was 16.14 million yuan, up 154 percent over the same period last year; and investment income was 10.16 million yuan, an increase of 11 times over the same period last year.
With the high growth of sales in this part, there is still room for follow-up. From January to September 2016, the company sold 223000 engines, an increase of 122.3% over the same period last year, of which September sales were 31000, an increase of 189.6% over the same period last year, showing an accelerated growth trend. The output of the important matching model Changan Auchan in September was 11300 vehicles, an increase of 14.10% over the previous month. The quantity process is smooth. Due to its high performance-to-price ratio, its sales volume still has room for growth. Hebei Chang'an produced 6169 vehicles, an increase of 60.61% over the same period last year. In addition, BAIC MPV model sales in September are also more encouraging.
Changan CX70, CS75, O'Nuo sell well, Dongan Mitsubishi profits grow steadily. Dongan-Mitsubishi sold 326300 engines from January to September 2016, an increase of 32.2 percent over the same period last year, of which 40000 were sold in September, up 38.6 percent from a year earlier. A number of Changan SUV supported by Dongan Mitsubishi, the participating company, are hot sells. in September, the output of CS35 was 17100, an increase of 13.68% over the same period last year, an increase of 11 times over the same period last year; the output of CS75 was 25300, an increase of 48.10% over the same period last year, and an increase of 213.30% compared with the previous month. The production of CS75 was 12000. The output of Ono was 11500 units, an increase of 14.78% over the same period last year and 92.16% month-on-month.
Benefit from the scale effect, and the expense rate is greatly reduced during the period. From January to September 2016, the company's sales expenses were 49.1 million yuan, with a sales expense rate of 2.8%, down 1.6 pct from the same period last year; management expenses were 126.48 million yuan, and the management expense rate was 7.1%, which decreased 7.7pct compared with the same period last year. As the company mainly supported Changan and BAIC, the growth of sales volume did not depend on the same proportion of expenses, and the expense rate decreased significantly in the first three quarters, and the scale effect of expenses was further revealed.
The performance inflection point is established, the medium-and long-term trend remains unchanged, and the "overweight" rating is maintained. After Changan Group became the controlling shareholder of the company, the company shifted from an independent engine supplier to focusing on supporting within the group, and the long-term growth momentum was more stable, making a profit for the first time in five years in the second quarter. In the first three quarters, the company followed the high growth of downstream supporting models, and is expected to maintain a high growth rate in the fourth quarter. The road test of 6AT gearbox is progressing smoothly, which will open up a broad growth space for the company. It is estimated that from 2016 to 2018, the EPS will be 0.32, 0.54 and 0.71 respectively, maintaining the "overweight" rating.
Risk hint: sales of matching models are declining