Events:
Del shares issued a semi-annual 2018 performance forecast: from January to June 2018, the company expects to return to its parent net profit of 0.92-106 million yuan, an increase of 45.13% and 67.21% over the same period last year.
Main points of investment:
The growth of new products is good, and the performance is in line with expectations. according to the performance forecast, the company's return net profit in the first half of 2018 increased by 45.13% 67.21% over the same period last year, which was in line with expectations, and the profit in the second quarter continued to increase compared with the first quarter. The performance growth mainly comes from two aspects: first, the company actively broadens the product line on the basis of the traditional product steering pump, continues to increase investment in new products, and keeps good growth in the new product electro-hydraulic pump, automatic transmission oil pump and automotive electronics business; second, in 2017, the German CCI continues to contribute income, sound insulation and noise reduction products have stable economic benefits.
At present, the new models of some of the company's products are still in a climbing period, and the annual performance will continue to release increments quarter by quarter with the release of orders.
Convertible bonds issued, the cost pressure point has passed the company's convertible bonds will be the priority placement of the original shareholders and online purchase on July 18, 2018, the total amount of funds raised this time will not exceed 565 million yuan, of which 289 million yuan will be invested in the annual new 500000 electro-hydraulic pumps project (the second phase of 450000 electro-hydraulic pumps), and 276 million yuan will be used for 1 million new auto automatic transmission pumps annually.
The corresponding production line has been put into construction, with the funds raised in place, the financial cost pressure of the company in the second half of the year will be significantly improved.
This year established as the performance inflection point, long-term growth room to open a large number of financial costs and equity incentive fees arising from the company's acquisition of CCI in 2017, and 2018 with the issuance of convertible bonds and the improvement of operating cash flow, the annual expense pressure will be greatly alleviated. We judge that with the gradual realization of the performance of new products with the smaller superposition of cost pressure, the company has entered the long-term growth channel.
Profit forecast and investment rating: maintain the buy rating. It is estimated that the company's EPS in 2018, 2019, and 2020 will be 2.57, 3.46, 4.12 yuan, respectively, and the corresponding share price PE will be 13-10-8 times, maintaining the buy rating.
Risk hints: the risk that the expansion of new products is less than expected; the risk that sales in the automobile market fall short of expectations; the risk that the performance of the acquisition target is not as expected; and the risk that the construction of fund-raising projects is not as expected.