Report summary:
Description of the event:
The company released its 2017 semi-annual report, achieving revenue of 353 million yuan in the first half of the year, an increase of 47.24% over the previous year; Guimu's net profit was 21 million yuan, an increase of 53.77% over the same period last year, corresponding to a profit of 0.05 yuan per share.
Incident reviews:
The auto parts business increased dramatically, driving performance growth. The company benefited from a steady increase in production and sales of new energy vehicles in the first half of the year. The company's auto parts business achieved revenue of 145 million yuan, an increase of 123.11% over the previous year. In addition, liquid metal products gradually opened up the market, achieving sales revenue of 18.681 million yuan during the reporting period, an increase of 84.08% compared with the same period last year.
Expenses fell during the period, and gross margin declined somewhat. The company's sales expenses, management expenses, and financial expenses in the first half of the year were 0.2 million yuan, 101 million yuan, and 08 million yuan respectively, up 58.44%, 12.51%, and 876.94% over the same period last year. The increase in sales expenses is mainly due to the increase in the company's current business development expenses and the increase in transportation costs. The three expenses totaled 79 million yuan, accounting for 22.32% of revenue, down 2.17 percentage points from the previous year. The consolidated gross margin was 26.59%, down 3.81 percentage points from the previous year. The main reason was that the gross margin of the company's aluminum and magnesium products declined compared to the same period last year.
The company is leading technology, cooperates with well-known companies such as Tesla, and is expected to expand in the future. In terms of auto parts, the magnesium alloy door interior panels developed by the company and GM won the 2017 International Magnesium Industry Association (IMA) Excellence Award. As an auto parts supplier, the company has entered the supply chain of well-known domestic and foreign customers such as Tesla, Harman, Desai, BYD, Geely, and Veray. Furthermore, the company has been steadily supplying liquid metal locks to Tesla. In terms of consumer electronics, the company's products have expanded from internal holders for mobile phones to tablets, laptop cases, etc., and has established cooperative relationships with well-known customers such as Huawei, Lenovo, Samsung, Wistron, Hesuo, and Lianbao. The company's performance is expected to increase in the future, benefiting from the continuous growth of new energy vehicles and the upgrading of electronic products.
Profit forecast and investment recommendations: The company's net profit for 2017-2019 is estimated to be 0.53, 0.64, and 70 million yuan respectively; EPS is 0.13, 0.16, and 0.17 yuan respectively. The corresponding P/E of the stock price on August 21, 2017 was 86.98X, 72.54X, and 65.98X, rated as an increase in holdings.
Risk warning: increased raw material costs and increased market competition