Events. The company released its annual report for 2017 and its quarterly report for 2018: revenue in 2017 was 395 million yuan, an increase of 21.21% over the same period last year, and its net profit was 59 million yuan, an increase of 15.17% over the same period last year.
In the first quarter of 2018, revenue reached 92.97 million yuan, an increase of 5.76% over the same period last year, and the net profit returned to its mother was 15.13 million yuan, down 8.44% from the same period last year.
The performance has grown steadily in the past 17 years, and all the main industries have performed well. The company's annual report disclosure performance is basically consistent with the previous performance KuaiBao, in line with market expectations. In terms of business, the four businesses that account for the highest share of revenue: electronic throttle pedals (37.72%), gear shifters (24.37%), cryogenic start-up devices (14.77%) and air conditioning controllers (13.09%) revenue increased by 9.64%, 40.23%, 107.4% and 26.45%, respectively. The rapid growth of shift gear business is mainly due to sales growth (+ 17.37%), structural changes, and an increase in the proportion of automatic gear products (average unit price + 19.49% in 2017). The rapid growth of low-temperature start-up devices (including grille heaters, flame preheating devices, etc.) is mainly due to the hot sales of commercial vehicles in 2017, especially heavy trucks.
The rise in the price of raw materials led to a decline in gross profit margin, during which the cost was better controlled. In 2017, the comprehensive gross profit margin was 39.2%, a year-on-year decline of 1.93pct, mainly due to a large increase in raw material costs in each business. Specifically, the raw material cost of electronic throttle pedal business increased by 14.2% (revenue + 9.64%) and shift controller business raw material cost increased by 58.17% (revenue + 40.23%). In terms of the period expense rate, the 17-year sales / management / financial expense rate is 7.05%, 15.93% and 0.04%, respectively, which is higher than that of the same period last year, and the overall cost control is good.
The investment in R & D is growing at a high speed and the results are dazzling. In 2017, the company spent 30.12 million yuan on R & D, an increase of 53.64% over the same period last year. In 2017, the company added 9 new patents, 27 patents are being applied for and accepted, and 3 new software copyright certificates have been added. At present, the company takes the lead in electronic shift technology, and has successfully developed and sold the first domestic electronic shift with up and down knob, and has been verified by small batch production of Monostable electronic gear, which helps the company to increase its market share of electronic shift and lay the foundation for the company's long-term performance growth.
The performance declined in the first quarter and did not change the medium-and long-term growth trend. The net profit of homing in the first quarter fell 8.44% from the same period last year, lower than the revenue growth rate of 5.76%, mainly due to the decline in gross profit margin caused by the rise in raw material prices (2.54pct). In addition, the increase in R & D investment also affected the growth of performance to a certain extent. We expect that in the follow-up companies through the investment of automation equipment, production line upgrading to improve production efficiency, promote new products and other ways to gradually absorb this negative impact. In 2018, the company aims to sell 475 million yuan, an increase of 20% over the same period last year, and a net profit of 64.36 million yuan after deducting non-operating profit and loss, an increase of 20% over the same period last year.
The gearshift industry accelerates growth, and the company's potential performance is flexible. In the next few years, self-branded passenger cars will be upgraded from manual to automatic, resulting in accelerated expansion of the gearshift market (a 3-5 times increase in unit price). In this process, self-branded shifter suppliers have particularly benefited. As an excellent supplier of shift gear products for self-branded passenger cars, the company will benefit significantly.
We roughly estimate that for every electronic shift that matches a popular model (assuming annual sales of 100000), it contributes about 20 per cent of the company's performance growth, potentially very resilient. The company's electronic gear shifter has matched Zhongtai T600gam700, SAIC Chase SV73/51, SAIC Wuling Baojun 560 and other models, and has obtained the matching fixed-point qualification of Geely Automobile electronic shift products, and is carrying out related product development work. Follow-up production is expected.
Investment advice. We expect the company's net profit from 2018 to 2020 to be 70.47 million yuan, 83.4 million yuan and 99.15 million yuan respectively, corresponding to the current price, the PE valuation is 35, 29 and 25 times, respectively. As a high-quality target in the field of automotive electronics, the company has great growth potential and is given a "buy" rating for the first time.
Risk hint. The growth of electronic shift products is slow; the heavy truck market has fallen sharply.
