1Q21 performance is basically in line with our expectations
The company announced 1Q21 results, with revenue of 974 million yuan, an increase of 46.4% over the same period, a decrease of 32.8%. The net profit returned to the mother was 18 million yuan, after deducting non-net profit of 17 million yuan, turning a loss into a profit. The performance was basically in line with our expectations.
Development trends
Operations declined seasonally, and the new energy charging business showed resilience. On the market side, according to data from the China Automobile Association, passenger car sales in 1Q21 were 5076 million units, an increase of 75.1% over the same period. Affected by the Spring Festival holiday, it fell 29.9% from the previous month. Due to the seasonal decline in the car market and the decrease in the frequency of transportation during the Spring Festival holiday, the company's car body advertising media, automobile 4S stores, car leasing, end-of-life vehicle dismantling, and new energy charging business revenue fell 32.5%, 35.9%, 8%, 48.5% and 12.3%, respectively, up 37.1%, 53.3%, 13.8%, 11.8% and 24.1%, respectively. Among them, the decline in the car rental and new energy charging business fell sharply below the overall level, showing strong resilience in seasonal changes in operations.
Actively promote large-scale construction of charging stations and be optimistic about the growth potential of the charging business. The company added 28 charging stations and 129 charging posts in 1Q21. By the end of 1Q21, the company had 373 charging stations and 2,158 charging stations, and the scale of charging facilities was growing steadily. On the market side, China's NEV sales reached 515,000 units in 1Q21, an increase of 2.8 times over the previous year. We expect that, driven by subsidies, increased supply of high-quality models in the market, and negative NEV credit pressure, annual NEV sales are expected to exceed 2 million units, accelerate ownership growth, catalyze an increase in public charging demand, and bring growth momentum to the company's charging business.
Gross margin continued to recover, and increases in cost rates and tax rates during the period dragged down quarterly net interest rate performance.
The company's 1Q21 gross profit margin was 19.1%, an increase of 2.0ppt over the previous year, an increase of 0.9 ppt over the previous month, and gross margin continued to rise; the net interest rate was 1.8%, down 1.2ppt from the previous month, the company's expenses rate increased 3.7ppt month-on-month, and the effective tax rate increased 29.4ppt month-on-month, making the company's 1Q21 net interest rate performance worse than 4Q20.
Profit forecasting and valuation
We kept our 2021/2022 profit forecast of 134/143 million yuan unchanged, maintaining the target price of 4.5 yuan and outperforming industry ratings. The current stock price/target price corresponds to 2021/2022 22.1X/20.6X P/E and 27.1X/25.4X P/E, with 23.0% room for upward movement.
risks
Charging station usage fell short of expectations, and car sales at 4S stores fell short of expectations.
