Event: the company recently released its third-quarter results report, the company achieved operating income of 957 million in the third quarter, an increase of 13.96% over the same period last year, and its mother's net profit was 60.6475 million yuan, down 10.85% from the same period last year. The company's operating income in the first three quarters totaled 2.58 billion yuan, an increase of 38.07 percent over the same period last year, and the net profit returned to its mother in the third quarter totaled 160 million yuan, an increase of 0.84 percent over the same period last year, including non-recurrent profit and loss of 9.49 million yuan. The decline in the company's profit growth rate is mainly due to the elevator control product market business affected by the industry market and other factors, the development is facing more severe challenges.

Comments:

With the intensification of competition in the industry, the elevator business is facing upgrading and reform: China has become the world's largest elevator manufacturing and sales country, and the company is one of the leading enterprises in the domestic elevator control system industry.

Affected by the slowdown of macroeconomic growth and real estate regulation and control policies, the development of the industry has entered a stable period. The company's operating income of elevator control products increased slightly in the first half of this year compared with the same period last year, and the company has reduced the proportion of elevator control products in revenue year by year, gradually focusing on robots and motion control products.

Acquisition of Mountain Intelligence Control, improve the layout of the robot industry: the company acquired Mountain Intelligence Control for 405 million yuan in June 2017, generating about 343 million yuan of goodwill. Zhi Shan Zhi Control is a company that develops, manufactures and sells servo drives and other motion control system products. New time has opened up the "core component-ontology-application-information" industry chain pattern. After the acquisition of Zhishan Intelligent Control, the company will further improve the layout of the company in the field of industrial robots.

Increase robot research and production capacity to further enhance the competitiveness of the industry: China's industrial robot production increased by 69.4% in the first three quarters of 2017, further reflecting that the new economy will become an important support.

The sales volume of the company's self-produced robot body exceeds 1000, the company's SCARA robot is the target of the international brand, and the company has independent intellectual property rights in the ontology control and drive company. With the high growth of the industry and the expansion of the company's production capacity, the competitiveness of the industry will be further enhanced.

Investment advice and rating: the company's net profit from 2017 to 2019 is expected to be 222 million yuan, 275 million yuan and 309 million yuan, and the EPS is 0.36,0.44,0.50 yuan, with a price-to-earnings ratio of 32 times, 26 times and 23 times respectively. Give a rating of "overweight".

Risk Tip: robot and Motion Control Business Development is not as expected