Key points of investment:
Helitai released its three-quarter report: 2018Q1-Q3's total revenue was 13.15 billion yuan, an increase of 27.04% over the previous year, and net profit attributable to shareholders of listed companies was 1,188 million yuan, with a year-on-year decrease of 30.85%, after deducting non-net profit of 966 million yuan, an increase of 20.01% over the previous year.
Revenue growth declined sequentially in the third quarter, and the increase in gross margin exceeded expectations. The company achieved revenue of 4.65 billion yuan in a single quarter in Q3, a slight decrease of 4.1% from the previous month and an increase of 9.2% over the previous year, a sharp decline of 52% and 31% from the year-on-year growth rate of Q1 and Q2. Q3 The gross profit margin for a single quarter was 80.6%, up 3.5 pct from the previous month and 2.6 pct from the previous year. The cost rate for the period was 9.3%, which was basically the same from month to month. Government subsidies related to operations were reduced in Q3 compared to the first half of the year. Other revenue was confirmed in the current period of 43.08 million. Compared with 2Q 127 million, there was little impact on non-operating income and expenditure. As a result, Q3 quarterly net profit was 490 million yuan, with a net interest rate of 11.08%, an increase of 1.9 pct over the previous quarter.
Q4 Net profit guidance is weak. The fluctuation range of net profit attributable to shareholders of listed companies in 2018 was 13-1.65 billion yuan, that is, the Q4 single-quarter net profit guideline was 1.12-4.62, with a year-on-year growth rate of -59%-+70%, a median value of 287 million yuan, a decrease of 41% from the previous month. Benefiting from the Q4 Android peak season, we expect Q4 revenue to remain relatively high, but Q4 usually measures higher management expenses and asset impairment losses, so profit margins are expected to decline.
Control has changed hands, and short-term performance and development plans remain to be seen. On October 9, the company announced that it intends to transfer 15% of the company's total shares to Fujian Electronic Information (Group) Co., Ltd., which will have the following effects: 1) The share transfer will divert management's energy and directly affect the business development progress of new products such as FPC, cameras, and new materials. The business progress of new products such as FPC, cameras, and new materials will fall short of expectations. The second half of the year is the traditional peak season for consumer electronics. The company successfully expanded its module business for major customers such as Huawei this year, but Q3 revenue declined slightly from month to month. 2) Helitai's management made performance promises. 2018/2019/2020 was no less than the audited net profit attributable to owners of the parent company of no less than 1,356 million yuan, 1,492 million yuan, and 1,611 billion yuan respectively. This profit target is growing steadily, but it is far below the company's plans and market forecasts at the beginning of the year. Therefore, whether the company can continue to grow at a high level depends on whether the management's excess performance incentives can be successfully implemented. 3) The nature of the company will change from a private enterprise to a state-owned enterprise, which will help reduce the risk of pledge rates and enrich the sources of operating capital, but the business synergy and future investment direction of Helitai and Fujian Electronic Information Group remain to be seen.
Lower the profit forecast and maintain the “buy” rating. The company's net profit for the third quarter was slightly lower than expected, and the median annual net profit guide of 13—1.65 billion yuan was significantly lower than Shenwan's previous forecast. The forecast for the progress of the FPC, camera module, and materials business was lowered, and the revenue forecast for 2018/2019/2020 was lowered from 239/300/40.8 billion to 191/217/24.2 billion yuan, and the net profit forecast of the mother was lowered from 1,82/2,48/3.47 billion to 15.2/18.0/2.07 billion. The consumer electronics industry chain has been weak and cost sensitive in the short term, and the company's cost control advantages in low- and middle-end modules have made it an important supplier for Huawei's low- and middle-end models. Combined with the company's horizontal expansion in modules and materials, it is expected that the steady growth in performance over the next 3 years will be supported by the current stock price corresponding to the 2018/2019 price-earnings ratio of only 11X/9X. Maintain the buy rating.