3Q18 performance meets expectations
Jiangling announced its 3Q18 results: 3Q's operating income was 5.903 billion yuan, down 12.80% from the same period last year; the net loss was 100 million yuan, compared with a profit of 90.6278 million yuan in the same period last year; corresponding to a basic loss of 0.12 yuan per share. The downturn in sales hit the company's profits and posted a single-quarter loss for the first time, in line with the company's previous performance forecasts.
Trend of development
Under the heavy pressure of sales volume, 3Q shows losses for the first time, and its R & D and sales costs are high. Under the pressure of depressed sales and price wars in the passenger car industry, the company's 3Q sales fell 18% and 30%, respectively, and revenue fell 12.8% and 24.4%, respectively. Competition in the industry has intensified, the company's marketing investment has increased, and sales expenses have increased by 1.4ppt to 4.8% compared with the previous month. The company still insists on R & D investment in new products and technologies, and the R & D expenditure rate has increased by 1.2ppt to 7.41%. The company still maintains a low debt ratio (51%) and still has 5.85 billion yuan in cash on its books, which can support follow-up R & D investment.
Sales of both the JMC and Ford brands have been hit, and the passenger car division needs to be adjusted. 3Q Ford and Jiangling brand sales fell 21% and 4% respectively compared with the same period last year. The passenger car division is the main drag, 3Q down 54% and 32% from the previous month, especially Yusheng SUV, sales further fell to quarterly sales of only 851 units, the passenger car division urgently needs to adjust its strategy and products.
Ford's new model brings new hope, waiting for the effect of channel integration. Jiangling Ford's new medium-sized SUV leader is expected to go on sale early next year and will be sold under Ford's newly established national sales and service agency, which is expected to bring new increments to the company. Ford brand products are expected to be integrated into a unified sales channel, which will help ease the pressure on Jiangling sales and stimulate Jiangling Ford brand sales.
Profit forecast
Due to the lower-than-expected profitability and product structure of the company's models, we lowered our forecast for the company's annual sales and expense rate by 49% to 271 million yuan from 46.3% to 271 million yuan.
Valuation and suggestion
The current share price of Jiangling A corresponds to 28 times of 18Accord, 31.4 times of 1919, and 0.7 times of Ppuma B, maintaining the neutral rating of AameB shares. However, due to the downgrade of profit forecast, we have lowered the target price of Apica B shares by 21% and 19% to 10.8 yuan and 8.8 Hong Kong dollars respectively, and the target price of A shares corresponds to 30.9 times of 18 / 19, 30.9 times of Phammer, 0.74 times of Phand B. There is 9.3% room for the current share price. The target price of B shares corresponds to the upside space of 18max, 23.2pm, 20.6 times Pmax, EMagne, 13.8%.
Risk
The hot sale of Ford's new models brings upside risks.
