Summary of the report:
Performance summary: in the first half of 2016, the company achieved operating income of 97.71 million yuan, an increase of 13.54% over the same period last year, and the net profit attributable to shareholders was 39.35 million yuan, an increase of 28.02% over the same period last year.
The recovery of the domestic bus market has promoted the rapid growth of CAN bus revenue. During the reporting period, the company's revenue grew rapidly compared with the same period last year, of which the main product CAN bus realized revenue of 85.7 million yuan, an increase of 14.92% over the same period last year, mainly due to domestic sales of 106300 passenger cars of more than 5 meters in the first half, an increase of 15.55% over the same period last year, which had an obvious pulling effect on the company's product demand. The company is the absolute leader in the domestic bus CAN bus market, with a market share of more than 40%. The core customers include first-line bus manufacturers such as Yutong, Suzhou Jinlong, Xiamen Jinlong and Xiamen Golden Travel. As the bus market continues to pick up, the company's annual revenue is expected to maintain rapid growth.
Gross profit margin remained stable and the rate of management expenses fell to boost net profit margins. Judging from the company's historical performance, the company's gross profit margin is very stable, with the current gross profit margin of 56.09%, down 1.7 percentage points from the same period last year, mainly due to the rise in the price of some raw materials. During the reporting period, the company's sales expense rate and financial expense rate were basically stable, and the management expense rate decreased by 2.04 percentage points year-on-year to 9.58%. Affected by the decline in expense rate, the company's net profit margin increased by 4.55 percentage points year-on-year to 40.27%. The CAN bus assembly rate of passenger cars and trucks has room for significant improvement, and the company is optimistic about its future prospects. The assembling rate of CAN bus for passenger cars and trucks in Europe and the United States is 100%, while that for domestic passenger cars is only 40%, and that for trucks is very low. In terms of passenger cars, under the drive of electronic and energy-saving vehicles, the assembly rate tends to increase, and the fast-growing new energy bus CAN bus is standard; under the stricter emission standards, the bus CAN bus market is also expected to break the ice. The company has a stable leading position in the bus CAN bus field, and has been laid out in the bus field for many years, so it is optimistic about the company's future growth potential.
Profit forecast and rating: it is estimated that the growth rate of net profit in 2016-2018 is 12.20%, 13.80% and 17.58%, respectively, and the EPS is 0.25, 0.28 and 0.33 yuan respectively.
Risk hint: the demand of bus market is low; the expansion of truck market is not as expected.
