Event: Hai Li Co., Ltd. announced the 2020 mid-term report. The company's 2020H1 realized income of 5.02 billion yuan, YoY-26.4%; realized performance of 50 million yuan, YoY-68.3%. Converted to the company's 2020Q2 single-quarter income of 2.64 billion yuan, YoY-23.0%; performance of 20 million yuan, YoY-65.6%. Q2 company's operating performance has improved slightly, and it is expected that with the recovery of the air-conditioning market, the company's performance will improve in the second half of the year.
Q2 single-quarter income decline narrowed: Haili shares Q2 single-quarter income YoY-23.0%, slightly narrowed compared with Q1 decline, marginal improvement in operating conditions. Announcement shows that Q2 company compressor and motor single-quarter sales YoY-10.5%/-8.7%, has improved compared with Q1 data, but the decline is still large. The improvement in the company's revenue is relatively small, which we think is mainly due to the weak demand of downstream air-conditioning enterprises. The industry online data show that the company's largest customer, Gree Electric Appliances Q2, produces YoY-10.4%. Considering the positive year-on-year growth rate of Q3 production in the downstream air-conditioning industry, we expect the company's Q3 revenue to improve. It is worth noting that Q2 Company received a balance of 30 million yuan in advance, which was basically the same as that in the same period last year, while the prepaid balance was 330 million yuan, an increase of nearly 100 million yuan over the same period last year, reflecting that despite the pressure on the demand side, the company is still actively preparing goods.
Q2 single-quarter gross profit margin decreased: Haili shares Q2 gross profit margin of 12.8%, year-on-year-1.0pct. We believe that the continued decline in the company's gross profit margin is mainly due to the transmission of end-market pressure to upstream enterprises, and the average product price of Q2 company has dropped by about 10%.
Q2 single quarter operating cash flow small net outflow: Q2 company operating cash flow net outflow of 110 million yuan, compared with a net inflow of 310 million yuan in the same period last year. Haili shares Q2 single-quarter cash flow situation has declined, we judge is mainly due to the decline in terminal demand led to the weakening of sales payback ability, the company Q2 sales goods received less cash, year-on-year-50 million yuan. At the end of Q2, the balance of the company's monetary funds + transactional financial assets (mainly structural deposits) was 930 million yuan, an increase of 140 million yuan compared with the end of Q1, and the company's cash flow was good.
Investment suggestion: Haili shares are the dominant brand in China's rotor compressor industry and maintain a leading position in the non-self-supporting market. In recent years, the company is also active in the construction of efficient new compressors and overseas markets. In the follow-up, with the improvement of the air conditioning market and the improvement of terminal demand, we believe that the company's performance is expected to improve.
We estimate that the EPS of the company from 2020 to 2022 will be 0.12 yuan 0.30 pound 0.38 yuan respectively, giving an investment rating of-A for overholdings.
Risk tips: downstream industry demand fluctuation risk, exchange rate fluctuation risk, goodwill impairment risk
