Main points of investment
Event: the company released its annual report for 2017 and quarterly report for 2018: annual operating income of 5.18 billion yuan, YOY-0.87%, net profit of 367 million yuan, YOY-17.73%. 2018Q1 operating income 1.05 billion yuan, YOY-24.07%, return to the mother net profit of 85 million, YOY-7.11%.
Revenue in 2017 was basically the same as the same period last year, and profits fell 18% from the same period last year, mainly due to the rise in the price of raw materials and the decline in revenue and profits from air-conditioning systems. Sub-business point of view: compressor sales of nearly 8 million sets, yoy+ 5.5%, compressor sales revenue of 3.35 billion, yoy+12.0%; air-conditioning system business income of 1.34 billion, yoy-20.4%; clothing business revenue of 500 million, yoy-10.9%. In 2017, due to the suspension of production of some of GM's major models in North America and a sharp increase in development expenses for new development projects, the company's air-conditioning system business growth profit fell sharply. In addition, due to the rising prices of aluminum, the main raw material, and the slowdown in the growth rate of the automotive industry, the gross profit margin and net profit of the compressor business declined to a certain extent.
After excluding the demolition subsidy, the profit of 2018Q1 has dropped greatly. The company's 2018Q1 operating income is 1.05 billion, yoy-24.1%, return net profit is 86 million, yoy- 7.1%. The company's 18Q1 non-recurrent profit and loss was 53 million yuan, of which the subsidiary Nanjing Autejia demolition compensation 58 million, the company deducted non-return net profit of 32 million yuan, down 63.5% from the same period last year. The company expects 2018H1 home net profit of 1.8-270 million, an increase of-2.5% to 46.3% over the same period last year. The main variables depend on the overall sales of the automobile industry, as well as the demolition progress of the Nanjing Aotejia Daming Road factory and the confirmed amount of compensation.
The company's short-term performance is under pressure, and medium-and long-term new orders are expected to maintain a "prudent overweight" rating. The company's short-term performance is under pressure due to the increase in the price of raw materials and the product adjustment of major international customers of air conditioners. In terms of new orders, 2018H2 is expected to increase significantly with the sales of electric compressors in BYD and BAIC related new energy models, and projects such as Jaguar Land Rover (air conditioning system), PSA Europe CMP (compressors), FAW-Volkswagen MQB (5 models electric compressors) and Volkswagen MEB (electric compressors) are expected to increase gradually in 2019 and beyond. Taking into account the rise in raw materials and the impact of air-conditioning international, we lowered the company's profit forecast for 2018-2019 to 378 million and 398 million, and for the first time gave a net profit of 455 million for 2020, maintaining a "prudent overweight" rating.
Risk tips: raw material prices rose further; the company's new customer orders were released less than expected; and the growth rate of self-brand passenger car sales declined further.
