Incident: The company released its 2018 annual report: it achieved annual revenue of 16.438 billion yuan, an increase of 43.02% over the previous year; realized net profit of 155 million yuan, an increase of 161.21% over the previous year, and the corresponding EPS was 0.04 yuan/share (based on the latest stock capital traceability calculation).
Key points of investment:
Product restructuring led sales growth and achieved both revenue and net profit growth 1) Q4 The company achieved revenue of 6.651 billion yuan in a single quarter, an increase of 20.99% over the previous year. The rapid growth on the revenue side was due to the company's accelerated product restructuring. On the one hand, it actively launched mid-range and high-end models with better performance and stronger competitiveness based on the “Darwin System”, such as EU5/EX360, etc., which accounted for 20.3% of sales of A-class models during the reporting period, an increase of 113% over the previous year, achieving product structure optimization; on the other hand, strengthened cost-effective national electric vehicle products and launched EC The series of upgraded products EC220 and EC3 strengthens the leading position in the A00 level market. The two forces enabled the company to achieve sales of 158,800 units in 2018, an increase of 53.11% over the previous year. The lower revenue growth rate than the sales growth rate was mainly due to the decline in bicycle prices in Q4. 2) Q4 achieved net profit of 23 million yuan to the mother, an increase of 188.94% over the previous year. The main reason for the rapid increase in profit was the sharp increase in government subsidies. In 2018, the gross margin of the company's NEV vehicle business was 14.52%, an increase of 1.15 percentage points over the previous year; the company's overall net interest rate was 0.88%, an increase of 0.52 percentage points over the previous year. 3) Net operating cash flow in 2018 was 3,554 billion yuan, and accounts receivable were 23.820 billion yuan (it is estimated that NEV subsidies receivable account for an important part). NEV subsidy receivables put great pressure on the company's operating cash flow.
The high-quality leader in the domestic pure electric passenger vehicle sector is expected to be the first to break through in the future1) The company is a domestic high-quality leader focusing on the pure electric passenger vehicle field. In 2018, the company sold 158,800 new energy vehicles, an increase of 53.11% over the previous year; the 2019Q1 sold 25,500 units, an increase of 20.46% over the previous year.
With the NEV subsidy policy continuously improving the technical standards and performance requirements for NEV vehicles, the company continued to strengthen technology research and development, continuously introduced new models with continuously improved performance to the market, achieved the continued strength of previous EC series models to the current EX/EU series models, and launched EX5/EX3 models in 2019. 2) The company continues to advance in intelligence and connectivity. In 2018, it launched the “Darwin System”, which comprehensively lays out vehicle artificial intelligence covering various fields such as vehicle technology, three-electric systems, intelligent driving, intelligent connectivity, and platform opening and data security. The company became the first car company to obtain a road test license for autonomous driving in Beijing. 3) We believe that as the NEV industry chain relies on technological progress to reduce costs and improve quality continues to advance, combined with the “pangasius effect” brought about by mainstream joint ventures and foreign brands entering the Chinese market one after another, the logic of supply to create demand is expected to continue to strengthen, and model performance will continue to improve. In particular, the emergence of “hot” models will further stimulate terminal demand, thus achieving a virtuous cycle and continuous explosion on both sides of supply and demand. As the first A-share company to focus on high-quality leaders in the field of pure electric vehicles and passenger vehicles, the company is expected to accelerate development in the future through capital market financing functions. Relying on capital, technology, scale and market advantages, it is expected to take the lead in breaking through under the market rule of survival of the fittest.
Profit forecasting, first coverage gave a “increase in holdings” rating
Based on the analysis, we expect the company's EPS in 2019-2021 to be 0.06/0.08/0.15 yuan/share respectively, covering the “increase in holdings” rating for the first time.
Risk warning: production and sales of new energy vehicles fell short of expectations; progress in technological progress and product performance improvement fell short of expectations; policy support fell short of expectations.