1H18 performance meets expectations
Jiangling announced 1H18 results: operating revenue was 14.29 billion, down 8.8% from the same period last year; net profit from non-return was 150 million, down 60.6% from the same period last year; and net profit attributed to the parent company was 320 million, down 42.3% from the same period last year, corresponding to 0.37% per share. The company's 2Q18 income was 7.81 billion yuan, an increase of 3.9%, 20.4%, 165 million yuan, and-49%, 7.6% compared with the previous month. In line with the company's previously released performance KuaiBao.
Trend of development
Under the high base, 2Q decreased significantly compared with the same period last year, and the gross profit margin climbed slowly compared with the previous year. Changes in accounting standards and product adjustments make the company's 2Q18 gross profit margin decline nearly 7ppt compared with the same period last year, which has become a major drag on 2Q performance growth. Non-operating income reached 160 million yuan in the same period last year, supporting its net profit to reach the highest level for the whole year, with a significant decline in 2Q from a high base. Revenue and net profit month-on-month ratio has improved, the company's product structure adjustment initial effect, gross profit margin month-on-month increase 1ppt.
The passenger car division maintained a high decline, and bicycle profits continued to decline. The company's total 1H18 sales were 143000, down 5% from a year earlier. Passenger cars continue to be influenced by channels and products, with Ford SUV and Yusheng down 40 per cent and 77 per cent year-on-year. The share of total commercial vehicle sales rose by 10ppt to 80 per cent. The downward shift of product structure led to a 52%, 10% to 2126 yuan drop in net profit from the previous month. The channel and structure of the company's commercial branch still need to be improved.
In the second half of the year, we will pay attention to the fulfillment of electric light truck orders and wait for the launch of Ford's new SUV next year. The company's first electric light truck Carey EV has received 7100 orders since its launch in April, and the realization of orders in the second half of the year will lead to more than 10 per cent year-on-year growth in light truck sales. In addition, Ford's new SUV Territory will be launched in early 2019 and will be produced by Jiangling. Ford controls the channel, which is expected to inject a boost into the Jiangling passenger car division.
Profit forecast
Considering that the company's bicycle profits continue to decline, we cut our 2018 Universe 19e profit forecast by 15.2% Universe 17.1% to 533 million yuan / 568 million yuan.
Valuation and suggestion
The company's current share price corresponds to 18.6 / 19 / 18 / 19 / 18.6 / 17.5 / Pmax E, maintaining the neutral rating of Aamp B and downgrading its earnings forecast. We reduce the target price of A / 18 / 19 / 22 / 19 from 16 / 13 to 13.6 / 10.8 by 15% / 17% and 20.6 / 10 / 10, respectively. There is room for 18% of the current share price. B shares correspond to 14.2 and 13.4 times the price of 18hammer in 1919, which is 26% more than the current share price.
Risk
Competition in the industry intensified and the company's sales were lower than expected.