Event
Mingjiahui released its quarterly report for 2018: the operating income in the first three quarters of 2018 was 974 million yuan, an increase of 135.8%, and the net profit was 253 million yuan, an increase of 115.5%.
Brief comment
Performance slowed in the first three quarters, but maintained high growth. The company's 18Q1-Q3 revenue and performance growth declined from a high base, down 22.5 and 51.1 percentage points from 18H1. Of this total, the income in the third quarter was 321 million yuan, an increase of 100.3 percent, and the net profit of returning to the mother was 75 million yuan, an increase of 48.1 percent. The performance growth rate was lower than the income growth rate, mainly due to the decline in gross profit margin compared with the same period last year. The decline in the third quarter compared with the first half of the year was due to the company strengthening account recovery and tightening the financing side, but still maintained relatively high growth.
Gross profit margin and period expense rate decreased compared with the same period last year. The company's 2018Q3 gross profit margin was 50.96%, down nearly 5 percentage points from a year earlier, but remained high. The rate for the period decreased by 1.68 percentage points compared with the same period last year. Among them, both sales rates and management fees are lower than the same period last year. We believe that on the one hand, we benefit from the economies of scale caused by revenue growth, on the other hand, the decline in management fees is related to the separate spin-off of R & D expenses under the new accounting standards. The increase in financial rates by 0.67 percentage points is mainly due to the tight financing environment this year, and the company's financing costs have risen by about 30%.
Cash flow continues to flow out, and the cash-to-cash ratio has improved. There was a net cash outflow of 237 million yuan from operating activities in the first three quarters. From a quarterly point of view, the net cash flow of 2018Q1/Q2/Q3 operating activities is 0.340.91 billion yuan respectively, and the cash outflow tends to expand. The cash-to-cash ratio of 2018Q3 is 0.32, up 6.4% from the same period last year. The company's enhanced account collection has achieved initial results, but due to the need for business expansion, the cash paid for the purchase of goods and services has increased significantly, resulting in an expansion of the net cash outflow.
We maintain our profit forecast for the company. The company has sufficient funds after non-public fund-raising, which is expected to promote the smooth transformation of on-hand orders. We estimate that the homing net profit of the company from 2018 to 2020 will be 333, 533, 732 million yuan, EPS 1.11, 1.78, 2.44, and target price 20.9, corresponding to 18.8, 11.7 and 8.6x PE. Maintain the "overweight" rating.
Risk tips: worse payback; impairment of goodwill; slowing down of industry growth