Events:
The company released its 17-year semi-annual report on the afternoon of August 28th: revenue of 193 million yuan, an increase of 34.73% over the same period last year, and net profit of 30.29 million yuan, an increase of 18.5% over the same period last year.
Main points of investment:
Excellent performance, with medium-to-high-speed growth in all sectors of business.
Overall, the company performed well, close to the upper limit of the previous forecast, with 17Q2 revenue up 42.8 per cent year-on-year, 19.3 per cent month-on-month and net profit 10.6 per cent year-on-year. The company's Q2 revenue growth slightly exceeded expectations, mainly due to the higher-than-expected growth of low-temperature start-up products (mainly used for commercial vehicles). 17Q2 revenue was 20.17 million yuan, an increase of 105.6% over the previous month, and a total growth of 60.2% in the first half of the year. The main driver of its growth is the continued high boom of the heavy truck industry in the first half of the year. In terms of the company's traditional core business, revenue from the 17H1 electronic throttle pedal business increased by 10.1%, which was mainly driven by the growth in demand for commercial vehicle products, while the passenger car business was dragged down by sales of downstream Jianghuai, brilliance and other independent brands. The revenue of shift controller business increased by 33.5%, mainly due to the upgrading of product structure (the increase in the proportion of electronic shift products) and commercial vehicles.
The R & D expenditure has increased rapidly, and the net interest rate has declined.
Gross profit margin, 17Q2 gross margin month-on-month decline in 1.6pct, year-on-year decline in 0.12pct, presumably due to fluctuations in raw material prices. In terms of fees, the 17H1 sales expense rate declined 0.32pct compared with the same period last year, which is a normal fluctuation, while the management expense rate increased 1.63pct compared with the same period last year, mainly because the R & D expenditure increased by 67.4%, the employee salary increased by 53.3%, and the financial expense rate declined 0.2pct compared with the same period last year, mainly due to abundant funds after listing and a sharp drop in interest expenses. Dragged down by administrative expenses, 17H1 net interest rate fell 2.15pct compared with the same period last year.
Electronic gear shifter to achieve mass production and become a high growth engine in the future
In the first half of the year, the company's electronic shift has achieved mass production, the main products are: knob shift, electronic gear, button shift, and used in Zhongtai T600max 700, SAIC Chase SV73/51, SAIC Wuling Baojun 560 and other models. We believe that with the increasing requirements of consumers for automobile comfort and intelligence, the high-performance automatic transmission will gradually replace the traditional transmission. Under this background, the electronic gearshift arises at the historic moment. The price of the electronic shift is more than 5 times that of the traditional manual shift. With the increase of the permeability of the automatic transmission, the electronic shift is expected to become the core driver of the company's high-speed growth in the future.
The company has benefited significantly from the continuation of the heavy truck industry
The company's commercial vehicle business (mainly heavy trucks) accounts for about 50% of revenue, and its main customers are core heavy truck enterprises such as Dongfeng, Sinotruk and FAW Jiefang. We believe that, driven by factors such as the release of engineering vehicles and the renewal cycle of heavy trucks (an average of 8-10 years), the current round of heavy truck market is expected to continue after 2018, and the company, as the core supplier of heavy truck shifters, electronic accelerator pedals and other components, will significantly benefit from the high prosperity of the industry.
Quality Automotive Electronics Company, maintain "recommendation"
We estimate that the company's EPS in 17-19 will be 0.41, 0.46 and 0.55 yuan respectively, and corresponding to the current price, the PE will be 43, 38 and 32 times respectively, maintaining the "recommended" rating.
Risk hint
Sales of commercial vehicles fell short of expectations; sales of Zhongtai and Jianghuai cars dropped sharply, etc.