Summary of investment

The mid-term economy rose slightly by 5%.

In the first half of the year, the market realized sales revenue of 484.47 billion yuan, compared with about 579.22 yuan in the same period last year, which decreased by about 16.4%. The decline in income was mainly due to the decline in sales revenue. In addition, the fatigue of passenger transportation business of Jianyuan Liuqi also caused a certain drag. The net profit per share was 8.5 billion yuan, an increase of 5.3% over the same period last year, and earnings per share was 0.99 yuan. The company continues to pay a fixed interim dividend of 10 cents per share.

Multi-factor communication promotes the rise against the trend.

The company rose against the backdrop of a weak market in the first half of the year. The main factors include:

1) the total cost decreased by 18.5%, which exceeded the decline in revenue, mainly due to the outstanding profit statement of commercial enterprises and the rapid development of automobile financial services. Thanks to this, gross profit fell only slightly, by 3.2% or 260 million compared with the same period last year. Gross profit margin increased by 2.2 percentage points year-on-year to 16.1%.

2) due to the decrease in the use of advertising products of the Shengli brand in the first half of the year, the consumption of sales continued to decrease by 11.4% or 324 million compared with the same period last year. Due to the reduction in fuel and water consumption planned for the same period last year, as well as the reduction in the cost of Shenzhou gasoline technology, the other consumption decreased by 870 million.

3) the profit of enterprises that should be accounted for increased by 697 million or 11.45% compared with the same period last year, mainly due to the recall of Honda passenger cars in the same period last year and the low base of the new energy industry due to the impairment of major investment funds.

The good news should be partially offset by the following factors:

1) due to the increase in interest expenditure and the unfavorable exchange direction, the expense of liability increased by 1.66 yuan compared with the same period last year.

2) the decrease in interest income will result in a decrease of 380 million in other operating income. The items of available-for-sale financial resources increased by 340 million.

The overall volume is out of the market, and Japanese brands are the main driving force.

According to the total sales volume, the company's market share in the first half of the year was 11.2%, an increase of 0.5 percentage points over the same period last year. The market share of passenger goods and commercial goods increased by 0.3% and 0.8 percentage points respectively. In the first half of the year, the company sold about 137.44 million cars, a decrease of about 9 percent over the same period last year, which was lower than the industry average of about 3.4 percent. Of this total, passenger sales were about 113.4 million units, down about 11.3% from the same period last year, which was lower than the industry average of about 2.7 percentage points; sales / SUV/MPV types fell 6.2%, 13.6% and 30.7% respectively compared with the same period last year. By brand, Japanese joint ventures are the main driving force of sales: limited sales fell 1.7%, car sales dropped 60%, and Honda's sales increased by 13.3%. Commercial merchandise sales reached 2405 million tons, an increase of 3.9% over the same period last year and 8 percentage points in the industry. Medium and heavy trucks decreased by 0.8% year-on-year, which was lower than the industry average by 5 percentage points. Card sales increased by 14.5% over the same period last year, with the leader leading by 16.2 percentage points.

The improvement of the legal brand has a heavy task, and the Japanese system will still be the main support.

In terms of sales in the third quarter, Japanese brands remained strong, while limited sales remained high, but the growth rate slowed down, with volume rising 5% year-on-year to 377,000 tons, while Honda rose 21.7% to 2.12 million tons. The legal system fell 40% year-on-year, with a record of 28,000 yuan. Under the influence of heavy trucks and heavy trucks, commercial boards recorded a steady increase, with the volume rising by 11% in the third quarter compared with the same period last year. China and France have launched a six-year meta-plan to reduce the level of management, and 14 new products will be launched in the next three years, with the aim of restoring annual sales volume to 400,000 yuan. I think that in the current market environment, the realization of the goal is a heavy task.

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According to the company's forecast after rectification, the corresponding rectification target is HK $9, and the price-to-earnings ratio is 4.7 times for each of the year 2019 and 2020, and the level of income is maintained. The reason for this is that the volume of the automobile market has fallen short of expectations. (as of October 24)