Event: the company publishes its 2017 annual report and quarterly report. In 2017, the company achieved revenue of 1.32 billion yuan, an increase of 25.6 percent over the same period last year, and a net profit of 132 million yuan, an increase of 11.8 percent over the same period last year. The non-parent net profit was 73 million yuan, a decrease of 18.8 percent over the same period last year, and basic earnings per share was 0.30 yuan. In the first quarter of 2018, the company achieved revenue of 326 million yuan, an increase of 29.5% over the same period last year, and a net profit of 18.613 million yuan, down 14.7% from the same period last year.
Comments:
The company's gross profit margin is under pressure. Due to raw materials and other factors, the company's consolidated gross profit margin fell by 2.0% in 2017 and 2.7% in the first quarter of 2018, while DeVos's performance fell short of expectations and increased investment in research and development led to lower-than-expected results. The company's R & D expenses accounted for 4.68% of revenue in 2017, and the company expects that annual R & D expenses will account for no less than 4% of annual sales, and higher R & D expenses will have a certain impact on the company's performance in the short term.
Natural gas market promotes the high growth of sea energy, and the competitiveness of the main drive motor is strong. Shanghai Haineng acquired by the company achieved a non-return net profit of 90.9215 million yuan in 2017, exceeding the performance commitment by 8.24%. It is mainly due to the strong demand for natural gas due to the influence of the national "coal to gas" in 2017, which is transmitted to the sales of natural gas heavy trucks. Due to the impact of natural gas prices in 2018, we expect the growth rate of marine energy performance to decline. In the aspect of drive motor, the company already has 120kW main drive motor to supply Geely Dihao, which proves the excellent quality of the company's products. The upward space of the company's motor products has been opened, and it is expected to further increase the market share in the future.
Raising funds to increase motor production capacity is expected to further increase performance. The company plans to increase 410 million for 200000 motors and 150000 electric drive integrated systems, which is expected to be put into production in 2019. Compared with the circular wire motor, the flat wire motor has many advantages, such as higher power density, better heat dissipation, lower noise and saving materials. According to the requirements of the Ministry of Science and Technology "New Energy vehicle pilot Project 2017 Project Application Guide", the peak power of passenger car motor ≥ 4KW/kg (≥ 30 seconds), while the current peak power of mainstream product-grade motors is about 3.2-3.3 KW/kg. In order to achieve a peak power increase of about 30%, flat-wire motor is an unavoidable technical route and a major trend of drive motor development in the future. Electric drive integrated system refers to the integration of a new type of motor and gearbox. After the implementation of the project, the company is expected to occupy a leading position in the industry and enhance the competitiveness of the company, thus further thickening the company's performance.
Profit forecast and rating: without considering the private placement, we expect the company's EPS in 2018, 2019 and 2020 to be 0.38,0.46,0.56 yuan respectively, and the PE corresponding to the closing price on May 10, 2018 is 23,19,16 times, respectively. We maintain the company's "buy" rating.
Stock price catalyst: downstream car sales exceeded expectations, the company's new product progress exceeded expectations.
Main risks: downstream car sales fall short of expectations; the economy continues to decline and demand is sluggish; and the company's product research and development progress falls short of expectations.