The 2015 annual performance is basically in line with expectations.
The company released its annual report for 2015, with an operating income of 10.2 billion yuan, an increase of 4.2% over the same period last year, and a net profit belonging to the parent company of 780 million yuan, an increase of 10.29% over the same period last year, which is basically in line with expectations.
The growth rate of automobile production and sales will slow down, and the company's parts business will maintain a trend of micro-growth.
The company's revenue growth was mainly due to the 63.18% year-on-year increase in revenue from goods trade to 1.23 billion yuan, accounting for 5.34% of revenue to 12%, but the gross profit margin of material trade fell 0.77% to 1.66%. The revenue of the auto parts manufacturing business reached 8.55 billion yuan, an increase of 0.73% over the same period last year, and the gross profit margin increased by 0.2% to 24.31%. In the case of a small increase in revenue, the expense rate during the company period decreased by 1.22 percentage points to 12.71%, mainly due to the decline in technology research and development fees, the salary of employees and the increase in exchange earnings, resulting in a slight decline in the rate of management expenses and financial expenses. As a result, the growth rate of net profit is slightly higher than that of revenue. We believe that due to the slowdown in the growth of auto production, the company's auto parts business will maintain micro-growth in the future.
The new energy vehicle business of the group is of high quality, and there is an expectation of asset injection.
The group owns Wanxiang Electric vehicle Company, battery manufacturer A123 and electric vehicle manufacturer Fisco, all of which are high-quality targets for new energy vehicles. On December 30, 2010, Wanxiang Group promised to buy a stake in Wanxiang Electric vehicle Company in the form of transfer and capital increase when the company thought that the conditions were ripe and proposed a motion, or when Wanxiang Electric vehicle Company completed its industrialization and its profit situation was normal and stable. We believe that the company participated in the capital increase of Tianjin Songzheng Electric vehicle Technology Co., Ltd. with 110 million yuan in cash in July last year, indicating that the company intends to develop in the direction of new energy vehicles. The rapid development of new energy vehicles in the past two years, the group's new energy vehicle business is expected to perform well, and promised normal and stable profitability, agreed to increase capital into the company. As a result, it can be expected that the follow-up injection of the group's high-quality new energy vehicle business into the company is a high probability event, and the valuation of the leading target of potential new energy vehicles should be given a reasonable premium.
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 is slowing down; the development of new energy vehicle business is not as expected.
