Items:
The company announced its results for the first half of 2018, with revenue of 1.063 billion yuan (11.77% YoY), net profit of 94 million yuan (6.15 YoY) belonging to shareholders of listed companies, and earnings per share of 0.34 yuan.
Peace viewpoint:
During the market expansion period, the rate of sales expenses increased slightly in the first half of 2018: the company reported that revenue in the first half of 2018 was 1.063 billion yuan (11.77 YoY), net profit belonging to shareholders of listed companies was 94 million yuan (6.15 YoY), sales gross profit margin and net profit margin were 31.38% and 8.86% respectively, reducing 0.61pct and 0.47pct respectively From a sub-business point of view, the revenue of lighting and lighting control business is 1.024 billion yuan (11.40% YoY) and 34 million yuan (19.88% YoY) respectively, accounting for 96% and 3% of revenue respectively, and the company's performance is slightly lower than expected. On the one hand, household lighting products, especially lighting products, have entered a rapid investment stage, and hardware channels are also in a period of market development. Advertising fees and other related expenses brought about by market expansion and marketing efforts have increased. The company's sales expenses in the first half of the year increased by about 34.67 million yuan compared with the same period last year, and the sales expense rate increased by 1.9pct to 14.79%. On the other hand, in the economic downward trend, the weakening market demand for commercial lighting, professional lighting and home lighting has affected the company's performance growth.
Build brand competitiveness and continuously improve channel construction: professional lighting such as commercial lighting and tooling lighting have very strict standards and requirements on product professional technical parameters and quality stability. The company invested 20 million yuan in R & D, an increase of 22.41% over the same period last year. Accounting for 1.89% of business revenue. At present, the company's sales market is mainly commercial lighting, tooling lighting and other professional lighting market, and the channel network is mainly in first-and second-tier cities. In terms of channel construction, the company has increased the sinking of physical marketing network channels, further developed dealers in second-and third-tier cities, extended sales channels to third-and fourth-tier cities, and vigorously opened up hardware channels. improve the breadth and density of the company's sales channels, and continue to improve the establishment of sales terminals. In the first half of the year, the company built more than 500 professional terminals and home terminals, and developed more than 300 new hardware display cabinet terminals. In addition, the company's manufacturing bases continue to improve production efficiency through automatic transformation of the production line, purchase of automated production equipment, optimization of production scheduling mode, process improvement and so on.
The proportion of LED lighting has increased, and the gold mine in the home lighting market is waiting to be explored: LED lighting products are 924 million yuan, up 17.44% over the same period last year; traditional lighting products are 99 million yuan, down 24.59% from the same period last year. The company's LED products have accounted for 90.27% of the total revenue of lighting products. In the past 17 years, the company has made great efforts to develop the household lighting business and set up an independent household products division. Through designing the new VI brand logo and signing Li Chen as the brand image spokesman, the company has a total of 2000 household lighting products stores or areas in the first half of the year. At the same time, the company has also carried out higher standards and image upgrading on the decoration and decoration of some sales terminals, so as to improve the storefront image of the company's sales terminals and the consumer experience of the majority of consumers. In terms of e-commerce channels, in addition to opening flagship stores in Tmall and JD.com, Vipshop Holdings Limited flagship stores have been added to further develop professional e-commerce channel dealers.
Investment strategy: in terms of profit forecast, LED lighting is affected by macroeconomic and real estate sales, the decline in the growth rate of the real estate market will affect home decoration lighting demand, macroeconomic impact on social and commercial conditions, and then affect the renewal speed of commercial lighting. We downgrade the company's 2018-2020 home net profit forecast to 281Mather 473 million yuan (the original value is 3.11According to the former PE for 18-14-11 times, Sanxiong Aurora Mobile Limited as a leader in domestic commercial lighting, actively develop the home lighting market, is expected to achieve commercial home two-wheel drive, long-term performance growth is worth looking forward to. Therefore, maintain the "recommended" rating.
Risk tips: 1) demand is lower than expected. LED lighting is affected by macroeconomic and real estate sales, the downturn of the real estate market will affect the demand for home decoration lighting, macro-economy will affect the social and commercial situation, and then affect the renewal speed of commercial lighting. The company to develop home lighting business may have low market recognition, rising sales costs and other risks; 2) rising cost of raw materials. The company mainly purchases LED chips and hardware for assembly and design, the industry cost transfer has a certain time lag, the rising cost of raw materials will affect the company's profitability; 3) the industry competition intensifies. LED general lighting is a fully competitive industry, the barrier to entry is relatively low, the industry competition is fierce, lighting products face risks such as price decline.