The performance in the first quarter was steady and in line with expectations.
The company released its quarterly report for 2016, with operating income of 2.563 billion yuan, an increase of 2.70% over the same period last year. The net profit belonging to shareholders of listed companies was 231 million yuan, an increase of 12.63% over the same period last year. The net profit after deducting non-profit was 226 million yuan, an increase of 14.04% compared with the same period last year.
Profitability has improved and rates are generally stable
Overall, the company's revenue has maintained steady growth, and the increase in gross profit margin is the main reason for the higher growth rate of net profit.
The growth rate of China's automobile production and sales in the first quarter of this year was 6.2% and 6% respectively. The company's auto parts business accounted for more than 80% of revenue, a rich variety of products, and relatively scattered downstream customers. The top five customers accounted for 23% of sales revenue in 2015, with an average of less than 5%. As a result, the overall performance of the company's automobile business is similar to that of the market, and the company's total operating income in the first quarter grew by 2.7% in line with expectations. The gross profit margin of sales in the first quarter was 23.62%, up 2.37% from the same period last year, indicating an improvement in profitability. During the period, the expense rate was 13.11%, an increase of 0.40% over the same period last year. Among them, the sales expense rate, management expense rate and financial expense rate were 3.56%, 8.36% and 1.19% respectively, with year-on-year changes of + 0.10%, + 0.49% and-0.19%, which remained stable as a whole.
The group's new energy vehicle assets are of high quality and are expected to be injected into the deposit.
The group owns vehicle and battery manufacturing enterprises, which are high-quality targets for new energy vehicles. The group's Fisk Automobile, which has been renamed Kama Automobile, is doing marketing and plans to produce 5000 cars this year. The second generation of products is also under development and is expected to be launched in the United States by the end of the third quarter.
Group battery enterprises, including the United States A123 and domestic Wanxiang An one, two, three, parallel development, the technology mainly comes from the United States A123, outstanding competitive advantage. According to the company announcement, the CDF invested 930 million yuan, accounting for 10%, in the battery business of the group, which shows that the development benefit of the battery business of the group is better. We believe that the group's new energy vehicle business continues to improve, and we also express our full support for the company's development, and the subsequent injection of high-quality assets is expected to be greater.
Maintain the overweight rating, with a target price of 21 yuan
The company's main business is growing steadily, and it is actively transforming to the new energy vehicle industry, and its performance and valuation have a lot of room for improvement. We expect the company's net profit from 2016 to 2018 to be 896 million yuan, 1.058 billion yuan and 1.279 billion yuan respectively, corresponding to 0.39 yuan, 0.46 yuan and 0.56 yuan for EPS. Maintain the overweight rating with a 6-month target price of 21 yuan, corresponding to about 45 times PE in 2017.
Risk hint: the growth rate of automobile production and sales slows down; the development of new energy vehicle business is not as expected.