I. Overview of events

On the evening of October 27, Deloitte released its quarterly report for 2017: (1) the company's revenue from January to September was 3.816 billion yuan, an increase of 20.00% over the same period last year. The net profit attributed to shareholders of the listed company was 123 million yuan, an increase of 60.25% over the same period last year, equivalent to 0.27 yuan for EPS, and 28.8022 million yuan for non-net profit, a decrease of 38.28% over the same period last year. (2) the company expects the net profit for 2017 to vary from 181.7753 million yuan to 201.1131 million yuan, an increase of 470% and 520% over the same period last year.

II. Analysis and judgment

The performance is in line with expectations, Liuzhou will fly together, and the market layout of new energy vehicles will be expanded.

1. The performance is in line with expectations. In the mid-2017 report, the company estimated that the net profit attributed to shareholders of listed companies from January to September 2017 was about 122.3946 million to 145.3435 million yuan, an increase of 60% to 90% over the same period last year, and the actual performance fell into the lower limit of the range. (2) the comprehensive gross profit margin was 14.67%, down 2.78% from the same period last year, and the net profit rate was 2.48%, up 0.89% from the same period last year. (3) the expense rate during the period was 13.48%, down 2.62 percentage points from the same period last year. The sales expense rate, management expense rate and financial expense rate were 2.73%, 8.90%, 1.85%, respectively, with a decrease of 0.92%, 1.38% and 0.32% respectively. (4) according to the company's performance guidelines, the company Q4 is expected to achieve a net profit of 59.1912 million yuan to 78.529 million yuan, with a loss of 37.821 million yuan in the same period last year, an increase of-256.50% and 370.63% over the same period last year.

2. (1) Q3 revenue was 1.407 billion yuan, an increase of 18.08% over the same period last year, with a net profit of 30.9438 million yuan, an increase of 33.33% over the same period last year. (2) the comprehensive gross profit margin was 14.96%, down 1.97 percentage points from the same period last year, and the net profit rate was 1.81%, an increase of 0.88 percentage points over the same period last year. (3) the expense rate during the period was 12.91%, down 2.42% from the same period last year, in which the sales expense rate, management expense rate and financial expense rate were 2.57%, 7.76% and 2.58%, respectively, and the changes were-1.83%, 0.79% and 0.20%, respectively.

3. The main reasons for the growth of Q3 performance: 1) the new holding subsidiary Liuzhou Shuangfei combined table, revenue and performance have increased; 2) active market development, the effect of industrial layout is obvious, and all incomes have maintained growth. Due to the increase in investment in market development and R & D of new energy vehicle products, the cost increased during the period.

Automotive electronics continues to push forward, vehicle chargers continue to break through orders, and the market size of automobile wiring harness exceeds 56 billion.

1, "car charger", the company has become Porsche, BMW, Peugeot Citroen, Dongfeng Fengshen, SAIC, Volkswagen and other brands future model core suppliers. In terms of automobile wiring harness, the company's joint venture Keshiderun and its holding subsidiary Plati are mainly engaged in medium-and high-end automobile connectors, including FAW-Volkswagen, Mercedes-Benz, Continental, Bosch, and Liuzhou Shuangfei serves domestic high-quality customers such as SAIC GM Wuling. The China-EU Smart Energy Industrial Park project continues to move forward, and some factories in the Chongqing Industrial Park have been completed, and the equipment and production lines are currently under installation and commissioning.

2. The wire harness value of traditional cars is about 2000-4000 yuan, while that of some high-end models is 5000-6000 yuan. According to the production of 28 million cars in China in 2016, the annual demand of China's automobile wiring harness market will exceed 56 billion yuan based on the price of 2000 yuan per car harness.

3, the subsidiary Meta "car charger" business continues to break through the large orders of many well-known vehicle factories, and the delivery time of most projects is from 2018 to 2019, the construction of product platforms and high-end customers will lay the foundation for the follow-up expansion of domestic and foreign new energy vehicle market; car harness market is large, new energy vehicle harness value is higher, car harness enters the performance harvest period. With the gradual release of the production capacity of products such as chargers, automotive electronics business will become an important growth point of the company in the future, and the proportion of revenue will increase rapidly. The company is actively promoting the raising of matching funds.

Third, profit forecast and investment suggestions

The company has formed a pattern of parallel development of the three major businesses of consumer electronics, automotive electronics and vehicle networking. As an industry leader in the field of home appliances and consumer electronics connectors, Type-C products have entered the performance release period; in the field of automotive electronics, the company has a rich product line and strong technical strength, and there is a strong demand for products such as car wiring harness and on-board charging modules, which will be the company's sustainable growth point in the future. In the field of vehicle networking, the company's extension cooperation to enhance technical strength, the leading industry layout ahead of time, products will gradually infiltrate the automotive afterloading market.

Considering the impact of dilution (the fixed acquisition of 60% stake in Liuzhou Shuangfei and supporting financing), it is estimated that the EPS from 2017 to 2019 will be 0.55 yuan, 0.91 yuan and 1.27 yuan. In view of the fact that the global automobile industry is accelerating towards intelligence and electrification, China has started a study on the timetable for the suspension of production and sale of traditional energy vehicles, which will promote the accelerated popularization of intelligent network-connected vehicles. At the same time, considering that the company's automotive electronics business cuts into the supply chain system of several vehicle factories and has high performance flexibility, the company is given a reasonable valuation of 31.85 to 36.40 yuan in 2018 and a reasonable valuation of 31.85 to 36.40 yuan in the next 12 months, maintaining the company's "highly recommended" rating.

Fourth, risk tips:

1, the development speed of new energy vehicles is not as fast as expected; 2, the development of home appliance industry is not as expected.