Events:
The company's revenue in the first half of 2016 was 765 million yuan, down 15.6 percent from the same period last year; the net profit belonging to shareholders of listed companies was 80.8809 million yuan, down 71.2 percent from the same period last year; and the deduction of non-net profit belonging to shareholders of listed companies was 73.938 million yuan, down 68.85 percent from the same period last year. Basic earnings per share is 0.095 yuan.
Main points of investment:
Dongfeng Yueda Kia sales structure has changed obviously, and the performance in the second half of the year is worth looking forward to.
The sharp decline in the company's first-half performance is mainly due to a sharp decline in Dongfeng Yueda Kia's profitability in the first half compared with the same period last year. While car sales and revenue fell slightly by 5.82% and 5.06% compared with the same period last year, net profit fell 63.89% year-on-year due to various promotional subsidies, cost amortization of new models, high proportion of models with lower gross profit margin, and so on. However, in terms of vehicle sales, the trend is obvious in June and July, with sales growth of 20% and 37%, while the company's profitable SUV sales grew by 64% in the first half of the year compared with the same period last year, accounting for 40% of the current sales. With the gradual increase in the proportion of profitable SUV and D-class cars in Dongfeng Yueda Kia and the pull of car sales due to the halving of purchase tax, it is expected that Dongfeng Yueda Kia's profit in the second half of the year will be significantly better than that of the same period last year and the first half of this year, which is worth looking forward to.
16Q2 performance has improved month-on-month, and is expected to improve significantly in the second half of the year compared with the same period last year.
Although the company's 16H1 profit was not satisfactory compared with the same period last year, in a single quarter, the company's 16Q2 realized a net profit of 49.32 million yuan belonging to the shareholders of the listed company, up 63.9% from the first quarter's net profit of 30.09 million yuan. Considering that the company's 15H2 loss is as high as 150 million yuan, with the help of Dongfeng Yueda Kia's improved performance and loss-making business reduction in the second half of this year, the performance is expected to reverse losses and achieve a substantial improvement compared with the same period last year.
Maintain the recommended rating.
We expect the company's EPS in 16-18 years to 0.41,0.54,0.67 yuan, with a price-to-earnings ratio of 23 times, 18 times and 14 times respectively, maintaining a "recommended" rating.
Risk hint: Dongfeng Yueda Kia's profits fell short of expectations; other business profits deteriorated significantly.