2017H1 profit growth rate of 6.67%, basically in line with expectations.
In the first half of 2017, the company achieved operating income of 1.654 billion yuan / + 49.7%, net profit of 65.32 million yuan / + 4.68%, and non-return net profit of 47.41 million yuan /-20.9%. The company's gross profit margin, net profit rate and period expense rate are 14.98%, 3.97% and 10.8%, respectively. Q2 achieved an operating income of 851 million yuan / QoQ + 5.83% in a single quarter, and a net profit of 26.85 million yuan / QoQ-30.2%.
The production line of intelligent assembly has increased significantly, and the automobile is still a key area.
From the perspective of subdivided products in the first half of the year, the intelligent assembly line is the main performance growth point, with business income of 859 million yuan / + 140%, close to the sum of the whole of last year, gross profit of 13.41% /-1.18 pct; industrial robot integration, business income of 566 million yuan / + 26.59%, 63% of last year's revenue, and gross profit margin of 17.52% /-4.39 pct Logistics automation has declined, with business revenue of 202 million yuan /-25.39%, accounting for 46% of last year's revenue, and gross profit margin of 12.67% /-7.44 pct; display control equipment and molding equipment did not contribute revenue in the first half of the year. From the perspective of industry segmentation, the automobile industry is still the core area of the company, with revenue of 1.425 billion yuan / + 76.93% in the first half of the year and gross profit margin of 15.05% /-3.61 pct.
The demand for body-in-white automation is booming, and the new Demecco plant is completed to strengthen production capacity.
The subsidiary Demecco 2017H1 has an income of 500 million yuan and a net profit of 32.11 million yuan. From 2015 to the first half of 2017, a total of 202 new energy vehicle production projects have been launched in China, involving an investment of more than 1 trillion yuan, more than 20 million vehicles have been publicly planned, and the demand for the transformation of body-in-white automatic production lines has been determined. De Mecco has rich experience in the design, manufacture and integration of body-in-white equipment, and the core technology has reached the international level, which is the main driving force for the company's future performance growth. The completion and commissioning of Demeike's Shanghai plant will enhance the company's overall production capacity and meet the growth of downstream demand.
Sufficient on-hand orders, enhanced payback ability to improve operating cash flow
As of June 30, 2017, the company received 395 million yuan in advance, an increase of 63.16% over the same period last year. The company's new orders in robot integration this year are up about 40% from a year earlier. In the first half of the year, the company's net operating cash flow returned to positive for the first time. In addition to the increase in revenue, the company also strengthened the management of accounts receivable. Accounts receivable at the end of the first half of the year was 1.254 billion yuan, up only about 8 per cent from the beginning of the period, much lower than the income growth rate.
A leader in automation equipment with both endogenous and epitaxial growth, maintaining a "buy" rating
Taking into account the rapid development of automotive automation production line, the perfect layout of the company's core business, the enhanced resources of high-end customers at home and abroad, and the order potential brought by the synergy of mergers and acquisitions, we expect the company to achieve net profit of 1.5,2.0 and 260 million yuan respectively, corresponding to EPS of 0.28,0.37,0.48 yuan and corresponding PE of 73,56,43 times respectively. With reference to the industry average PE level of 60 times in 2018, the short-term valuation of the company fluctuates greatly, but there are still trading opportunities in the future. We believe that the reasonable PE of the company in 2018 is 6770 times, and the corresponding reasonable share price is 24.80 to 25.84 yuan (up by about 12%).
Risk hints: the macroeconomic downturn leads to the reduction of downstream investment; the failure of M & A business integration leads to the risk of performance fluctuations; and the untimely repayment of accounts receivable leads to the risk of bad debts.