2018 results are in line with expectations, 1Q19 performance decline-80% slightly worse than expected
The 2018 performance is consistent with KuaiBao: annual revenue of 70.1 billion yuan (2%), net profit of 200 million yuan (- 66%), and non-return net profit of 170 million yuan (- 70%), which is consistent with the performance of KuaiBao. In terms of ratio, gross profit margin remains unchanged and net profit margin decreases by 0.6ppt to 0.3%.
For a single quarter, 4Q18's operating income is 16.1 billion (- 23%), gross profit margin is down 0.3ppt to 6.1%, net profit is down 260% to-190 million yuan, and net profit margin is down to-1.2%. The reasons for the big decline in 2018 performance are as follows: 1) the financing cost of the company in the context of national macro deleveraging increased significantly from 4-6% in 2017 to 8-9% in 2018. 2) the company takes the initiative to shrink the supply chain finance business. In terms of cash flow, 1Q18-1Q19 has four quarters of positive operating cash flow and enhanced payback ability.
In terms of business, deep business (380 distribution platform) still accounts for 58% of revenue / gross profit, but revenue growth has dropped to 1%. The proportion of revenue and gross profit of breadth business (upstream and downstream customers) is 24% and 14% respectively. Revenue growth is still high at 19%. Global procurement platform and Yushang Financial Holdings reported a decline of 13% and 88% respectively.
1Q19's performance is slightly worse than expected: according to the results forecast issued on February 28, the net profit of home has declined by 60% to 90%, actually by 80%, close to the lower edge of the forecast. The main reason is that it still takes time for companies to replace high-cost funds with lower-cost funds, and the effective interest rate of 1Q19 is down 1.5ppt to 7.7% compared with 4Q18, but it is still much higher than the 4.4% level of 1Q18. In addition, Yatong expects 1H19 performance to decline 60-85% year-on-year, corresponding to 2Q18 net profit of 0.1-90 million yuan, corresponding to 2Q19 net profit decline of 34-94%.
Trend of development
Looking forward, the state-owned equity investment will reduce financing costs has not changed, but it may take longer than investors had expected, and we also suggest that we focus on Avatar's efforts to streamline business and improve human efficiency. In the supply chain business, the company will strengthen cooperation with local governments to improve the service capacity of Philips, Bosch, MTG and other major brands.
Profit forecast
Considering that the reduction in financial costs is slower than we expected, we cut the profit of 2019 Universe 20e by 68% of Universe 59% to 230,000,000 yuan.
Valuation and suggestion
The company's current share price is 5.78 yuan, which corresponds to the 1920-year 54-pound price 34 times the price of E. For the time being, we maintain our neutral rating and maintain the target price of 5.5 yuan (corresponding to a 5% drop), corresponding to the target price of 1920 51 less 32 times Pmax E.
Risk
Macroeconomic stall, high financing interest rates and worsening cash flow.
