Performance review
Maintain to outperform the industry
1H19 performance is in line with our expectations
The company announced 1H19 results: revenue of 2.47 billion yuan, an increase of 20.3% over the same period last year; net profit of 53.22 million yuan, an increase of 32.9% over the same period last year, deducting 52.19 million yuan of non-net profit, an increase of 49.7%, and the performance was in line with our expectations.
The company's media, 4S stores and new energy vehicle charging business earned 229 million yuan, 1.87 billion yuan and 197 million yuan respectively, accounting for 93% of the total revenue, up 18.96%, 21.93% and 41.49%, respectively.
The total gross profit margin was 15.8%, down 2.3ppt from the same period last year, mainly affected by the decline in gross profit margin for charging 4S stores and new energy vehicles.
Trend of development
The charging business has grown rapidly, and the deployment of charging stations has grown steadily. The company's 1H19 operates 125 charging stations and 735 charging piles, serving 6378 buses and Prida 14, up 2% from 2018. Revenue increased by 54% compared with the same period last year, and gross profit margin decreased 7.4ppt, which we believe is mainly due to the decrease in charging service fees and the high year-on-year growth in the number of charging piles. With the improvement of operational efficiency, we believe that 2H gross profit margin can pick up somewhat from the previous month.
Car distribution and media business grew steadily. The company's 4S business is mainly engaged in joint venture middle-and high-end brands, mainly Japanese and German cars, less affected by the overall car market, revenue increased 21.9% year-on-year, but gross profit margin decreased 1.67ppt. The total amount of media operated by media business companies has not increased compared with the same period last year, and some links have declined from the same period last year, but revenue has also increased by 18.96%, mainly due to the increasingly stringent outdoor advertising in Beijing and the improvement of the scarcity of media resources.
If the expense rate is properly controlled, the hedging gross profit margin will fall. The company's 1H19 sales, management, financial expense rate fell respectively 0.5ppt, 1.4ppt, 0.7ppt compared with the same period last year, properly controlled, the total decline in 2.6ppt, offset the impact of the decline in gross profit margin 2.3ppt. The net interest rate also increased by 0.2ppt.
Profit forecast and valuation
We maintain the net profit forecast of 1930e 1.45max, which is 169 million, and the current share price corresponds to 19/20e21/18x Pamp E. Considering that the overall car market is still under pressure and the valuation link is suppressed, we reduce the target price by 18% to 5 yuan, corresponding to 19max 20e 28MB 24x Pmax E, which has 32.3% room to rise and maintain the industry rating of outperforming.
Risk.
The utilization rate of charging piles climbed less than expected, and car sales in 4S stores fell short of expectations.