Main points of investment
In 2017, revenue increased by 21.21% over the same period last year, and net profit increased by 15.17% over the same period last year, which was lower than our previous forecast. The company released its annual report for 2017, with an annual operating income of 395 million yuan, an increase of 21.21% over the same period last year, a net profit of 59 million yuan, an increase of 15.17%, a gross profit margin of 39.20%, a decrease of 1.92% over the previous year, and a net profit rate of 15.04%, a decrease of 0.37% over the previous year. At the same time, the company released its quarterly report for 2018, 2018Q1 achieved operating income of 93 million yuan, an increase of 5.76% over the same period last year; net profit of 15 million yuan, down 8.44% from the same period last year; gross profit margin of 39.18%, down 2.54% from the same period last year; net profit rate of 16.83%, 1.68% lower than the same period last year; revenue and net profit growth continued to slow in the first quarter. The company's 2017 performance was lower than we expected, mainly due to the lower-than-expected release of new capacity raised by the company's IPO.
Benefiting from the high magnanimity of the downstream commercial vehicle market, the commercial vehicle-end business has achieved high growth. The domestic commercial vehicle scene has continued to improve since the second half of 2016, with sales of 4.161 million vehicles in 2017, an increase of 14.0 percent over the same period last year, of which 1.117 million were heavy trucks, an increase of 52.4 percent over the same period last year. The company's commercial vehicle products are equipped with customers such as SAIC Iveco, Weichai Power, Guangxi Yuchai, FAW Jiefang, etc., benefiting from the rapid growth of its production and sales volume, the revenue of this business segment reached 218 million yuan in 2017, an increase of 41.25% over the same period last year.
The customer structure of passenger car business needs to be optimized, and it is expected to develop gradually in the future. While gaining a foothold in the commercial vehicle market, the company has gradually expanded its customers in the passenger car field, and the proportion of passenger vehicle revenue has increased from 34.03% in 2013 to 50.87% in 2016. Affected by the decline in production and sales of passenger cars such as Jianghuai Motor and Dongfeng Motor in 2017, passenger car revenue slowed to 173 million yuan, the growth rate slowed to 4.57 percent, accounting for 43.88 percent of the total revenue. In 2017, the company obtained the fixed-point qualification of throttle pedal and electronic shift products for many Geely Automobile models, and it is expected that with the improvement of customer sets and the continuous optimization of product structure, the passenger car business is expected to develop gradually.
At this stage, the release of new capacity is less than expected, and its gradual release is expected to improve the company's performance quarter by quarter in the future. The company's IPO fund-raising capacity will be gradually completed in 2016. according to the original plan, the new production capacity will be fully put into production in 2018, when the total production capacity of electronic throttle pedals and shift controllers will reach 5 million and 1.35 million respectively. However, at present, the progress of the release of the company's new capacity is not as expected. In 2017, the output of electronic throttle pedals and shift controllers was only 271.33 million and 596600 respectively, and the income was 149 million yuan and 96 million yuan respectively. Assuming that the new production capacity is fully reached in 2019 or 2020, 2 million and 750000 pieces of electronic throttle pedals and shift controllers can be added respectively, calculated at an average annual price of about 54 yuan and 169yuan per piece in 2017. it can increase the company's income by about 108 million yuan and 228 million yuan respectively (a total of 336 million yuan, an increase of about 85% over 2017), which can bring greater performance flexibility. We judge that with the optimization of the company's passenger car customer organization and the full release of production capacity, the future performance is expected to improve quarter by quarter.
Investment advice: we predict that the company's earnings per share from 2018 to 2020 will be 0.43 yuan, 0.53 yuan and 0.69 yuan respectively, and the return on equity will be 17.2%, 19.6% and 23.0% respectively, maintaining the "buy-A" investment rating.
Risk hint: sales of matching models are lower than expected; the progress of new capacity reaching production is not as expected.
