In the first half of 2017, revenue increased by 14.39% compared with the same period last year, and net profit increased by 4.74% over the same period last year. In the first half of 2017, the company achieved revenue of 294 million yuan, an increase of 14.39% over the same period last year, and a net profit of 70.84 million yuan, an increase of 4.74% over the same period last year. The comprehensive gross profit margin was 40.34%, down 6.08 pct from the same period last year.
The rate of expenses increased slightly during the period. In 2017, H1, the company period expense rate was 17.72%, a slight increase of 0.86 pct over the same period last year, of which the sales expense rate was 7.05%, an increase of 1.06pct over the same period last year; and the management expense rate was 11.14%, an increase of 0.21 pct; financial expense rate-0.47%, a decrease of 0.42 pct over the same period last year.
Electronic control, medium and low voltage frequency converters jointly promote revenue growth, and the decline in gross profit margin affects profits. In 2017, H1, the rapid revenue growth is due to: 1) the company's electric vehicle electric control products revenue of 233 million yuan, an increase of 16.41% over the same period last year; 2) revenue of medium and low voltage frequency converters was 53 million yuan, an increase of 14.36% over the same period last year. The lower growth rate of net profit than revenue is mainly due to a 6.08 pct drop in gross profit margin compared with the same period last year.
The business of motor controller is growing steadily, and the electric control of passenger car is already being tested. In 2017, H1, the company's electric vehicle motor controller business achieved revenue of 233 million yuan, an increase of 16.41% over the same period last year. The gross profit margin of the product was 39.89%, down 7.23 pct from the same period last year, mainly due to the decline in product prices caused by the decline in subsidies for new energy vehicles. Since May 17, affected by the opening of new energy bus bidding, the output of new energy commercial vehicles has begun to increase to more than 7000 vehicles per month, showing a trend of gradual recovery. We expect to give a certain impetus to the company's electronic control business. In terms of electronic control of passenger cars, relying on years of technical accumulation, the company has approached a number of passenger car companies to carry out technical docking and prototype testing.
The business of medium and low voltage frequency converter is growing steadily, and the recovery in the lower reaches is still continuing. In the first half of 2017, the company's medium and low voltage frequency converter business achieved revenue of 53.44 million yuan, an increase of 14.36% over the same period last year, and a gross profit margin of 40.12%, a slight decrease of 1.19 pct over the same period last year. The industrial control industry has gradually recovered since the second half of last year. According to the industry research, the recovery continues in the first half of this year. We expect the industrial control industry to maintain rapid growth throughout the year and promote the sales growth of the company's frequency converter-servo system products.
Profit forecast and investment advice. We estimate that the company's net profit from 2017 to 2019 will be 1.86,2.36 and 298 million yuan respectively, up 19.59%, 27.27% and 25.98% over the same period last year, and diluted earnings per share of 0.89,1.14,1.43 yuan. Considering the valuation of the same industry, and the company's performance related to electric vehicles accounts for a relatively large proportion, it will be given 27 times PE in 2018, corresponding to the target price of 30.78 yuan per share.
Uncertainties. The development speed of new energy vehicle industry is not as fast as expected.