The company released its 2017 results KuaiBao, with a total operating income of 1.53 billion yuan for the whole year, an increase of 61.4% over the same period last year. The net profit belonging to shareholders of listed companies was 160 million yuan, an increase of 103.9% over the same period last year. The company's high-speed growth of operating income and net profit in 2017 is mainly due to the successive supply and acquisition of new projects in front of the company's CID system, including Sanqi Communications, British Card Technology and Shanghai Hangsheng. The layout of the company's car networking industry chain has been continuously improved, which is conducive to providing customers with complete vehicle networking solutions and further expanding customers. The company is about to supply Zhongtai Automobile with intelligent cockpit products in bulk, and the value of bicycles has increased significantly. The company is expected to open up new market space with intelligent cockpit products. We expect the company's earnings per share from 2017 to 2019 to be 0.38,0.60 and 0.75 yuan respectively. Considering the broad development prospects and high growth space of the company's automotive electronics business, we maintain the buy rating.
Support the main points of rating
Endogenesis and extension together build high growth, and the layout of the industrial chain of vehicle networking has been continuously improved. The company's operating income and net profit grew rapidly in 2017, mainly due to the continuous supply of new projects in front of the company's CID system, product structure upgrading to the middle and high end, sustained growth of main business and mergers and acquisitions of Sanqi Communications, Yingka Technology and Shanghai Hangsheng began to merge in the second quarter. After the acquisition of the three companies, the company has formed a complete vehicle networking industrial chain of "CID system + vehicle networking software and hardware + operation platform", which can provide customers with a complete vehicle networking solution, which is conducive to increasing the value of products and further expanding customers. The company recently won the bid "Guangzhou Automobile Toyota Motor Corp Co., Ltd. Thanksgiving Hanlanda activity-Tire pressure Monitor Purchasing Project", with an estimated purchase volume of 200000 sets and a winning bid price of 57.6 million yuan. after the successful implementation of the project, it is expected to expand the customer relationship with GAC and expand the scope of cooperation.
Smart cars are in a period of rapid development, and the intelligent cockpit is expected to take the lead in bringing development opportunities to the company.
The "Intelligent vehicle Innovation and Development Strategy" (draft) issued by the National Development and Reform Commission proposes that by 2020, the proportion of new smart vehicles will reach 50%, and by 2025, new cars will basically be intelligent. With the rapid increase in ADAS penetration, the smart cockpit industry is expected to take the lead in the outbreak. The company is about to supply Zhongtai Automobile with intelligent cockpit products in bulk, the price of the intelligent cockpit is as high as 4,000-7,000 yuan, and the value of bicycles has greatly increased. The company is expected to open up new market space with intelligent cockpit products.
The chairman called on employees to increase their holdings and make promises to show their strong confidence in the development of the company. According to the company announcement on December 26, 2017, Xiao Xing, the company's controlling shareholder and chairman, also advised all employees to buy the company's shares, and if they bought the company's shares net from December 27 this year to January 12, 2018, and held them for more than 6 months in a row, the profits shall be owned by the employees, and those with losses or earnings of less than 3% shall be made up by them. The stock price of the company during the proposed purchase period is 13.65-16.97 yuan, which builds a safety margin for the share price and shows the chairman's strong confidence in the future development of the company.
Main risks faced by rating
1) the advance of the pre-loading business is lower than expected; 2) the integration of the acquisition business is not as expected.
Valuation
We expect earnings per share from 2017 to 2019 to be 0.38,0.60 and 0.75 yuan respectively. Taking into account the broad development prospects and high growth space of the company's automotive electronics business, we maintain the buy rating.
