2017Q1~Q3 performance meets expectations

Xinshida announced its Q1-Q3 results in 2017: operating income was 2.58 billion yuan, up 38.07% over the same period last year; net profit belonging to the parent company was 160 million yuan, up 0.84% from the same period last year, corresponding to 0.26 yuan per share.

Income statement: financial expenses increased by 114.87% year-on-year, mainly due to an increase in bank borrowing, an increase of 18.11 million over the same period last year, accounting for 11% of net profit. Sales expenses and administrative expenses increased by 37% and 18.6% respectively, matching the growth rate of revenue.

Balance sheet: notes receivable and accounts payable increased by 101.13% and 118.34% respectively over the same period last year, mainly due to the growth of robotics and motion control business. Inventory increased by 39.48%, mainly due to the corresponding increase in raw material reserves due to the growth of robotics business.

Cash flow statement: the company has a net operating cash outflow of 164 million, mainly due to the growth of the robot business, resulting in an increase in prepayments.

Trend of development

The gross profit margin of elevator products stabilized, but the business situation of elevator control products in the third quarter was lower than expected.

Robot and motion control business has become the company's main business. As can be seen from the financial statements, the business is developing rapidly. The company is expected to double its robot sales of more than 1600 units for the whole year. The honorable business of Xinghe Xiaoao has remained stable. Huitong's revenue is expected to grow by about 30%, continuing to maintain its stable channel advantage. At the same time, the company acquired the mountain intelligent control to improve the layout of the servo system. The layout of the company in motion control, robot body, servo system and other fields has been relatively perfect. We expect that through the integration of various parts of the business, the company will give full play to its synergy and consolidate its dominant position in the robot industry in the future.

Profit forecast

We keep our earnings per share forecast for 2017 / 2018 unchanged.

Valuation and suggestion

At present, the company's stock price corresponds to the company's 18-year 34.4x/29.3x in 2017. We maintain our recommended rating and target price of 16.00 yuan, which is 42% higher than the current share price.

Risk

1) the output of the elevator industry has declined more than expected. 2) the competition in the robot industry is intensified.