Events:

Founder Motor released its semi-annual report that in the first half of the year, the company achieved an operating income of 595 million yuan, an increase of 9.52% over the same period last year, and a net profit of 44.49 million yuan, down 21.77% from the same period last year. The net profit after deducting non-profit was 40.458 million yuan, down 23.68% from the same period last year.

Main points of investment:

Affected by the decline in the performance of Hai Neng Electronics, the company's profits have declined.

Revenue in the second quarter was 270 million, down 7.67% from the same period last year, and net profit was 25.88 million yuan, down 26.18% from the same period last year. It is mainly due to the large decline in the performance of Haineng Electronics, which is a drag on the overall profit performance of the company. The car seat motor business is still growing steadily. Due to the decline in gas engines and the lower-than-expected motors of new energy vehicles, the company expects a median third-quarter result of 26.76 million, down 10 per cent from a year earlier.

Hai Neng Electronics has been affected by industry adjustment, resulting in a sharp decline in its performance.

In the first half of the year, the revenue of Hai Neng Electronics was 73.02 million yuan, down 40.1% from the same period last year, and the net profit was 22.34 million yuan, down 41.6% from the same period last year. The main product of Hai Neng Electronics is the gas engine control system. Affected by the gas shortage at the end of 17 years, the production and sales of natural gas vehicles represented by LNG heavy trucks declined sharply in the first half of 18 years, nearly 60% lower than the same period last year, and Hai Neng's performance was greatly affected. We believe that the decline of natural gas engines is mainly affected by accidental events, the current LNG price has returned to a reasonable level, the production and sales of natural gas heavy trucks are expected to be gradually repaired, in the environment of unprecedented environmental governance efforts of the government, the advantages of natural gas vehicle emissions will become more and more obvious, optimistic about the long-term development of natural gas vehicles, so the performance of marine energy is still guaranteed in the future.

Car seat motor continues to grow, new energy vehicle motor is lower than expected

In the first half of the year, the company's automobile business income was 259 million yuan, down 1.6% from the same period last year, and the gross profit margin was 25.65%, down 2.2 percentage points. Excluding the impact of a 49 million drop in Haineng electronics revenue from the same period last year, the company's automotive motor business income was 186 million yuan, an increase of 32% over the same period last year, and the gross profit margin was basically flat. The company's seat motor business has grown significantly, with production and sales of more than 3 million units in the first half of the year, an increase of more than 50% over the same period last year, and a breakthrough in high-end projects. It has successively passed the certification of high-end automobile brands such as Jaguar Land Rover and BMW, and began to deliver in bulk. The company has taken the lead in car seat motors and will continue to grow in the future. Hubei Fangzheng is being driven by the growth of the commercial vehicle industry, and the car wiper business has expanded well, with an income of 44.345 million yuan, an increase of 30% over the same period last year.

Affected by the policy adjustment, pure electric logistics vehicles have not been sold in bulk for half a year, and it is expected that the volume will be significantly increased in the second half of the year. In terms of driving motors for new energy passenger vehicles, the company has achieved remarkable results in customer development and has become the main motor supplier of Baojun E100 and E200 under SAIC GM Wuling. Baojun E100 sold 10,000 vehicles in the first half of the year, and E200 is expected to carry on in the second half of the year. At the same time, the company entered Geely's supply chain in 2018 and became a motor supplier to Dihao EV, which is expected to increase by the end of the year. The market share is expected to continue to increase in the future. In terms of products, the integrated drive system is the future development direction of the drive motor. The research and development of the company's new energy integrated drive system and mass production have been completed, and the Baojun E200 equipped with the company's integrated drive system has been put on the market. In terms of new products, the development of the company's flat wire motor is smooth. In terms of integrated drive systems and flat-line motors that represent the future development direction of the industry, the company has been ahead of domestic enterprises.

Intelligent controller resumes growth, sewing motor develops stably.

The company's intelligent controller business achieved revenue of 186 million yuan, an increase of 39.6% over the same period last year, and a net profit of 11.852 million yuan, an increase of 57.3% over the same period last year. After the adjustment in 2017, Shenzhen Hi-Tech run's product structure and customers have been upgraded. The revenue of sewing motor business was 108 million yuan, down 7.31% from the same period last year, and the gross profit margin was 15.17%, down 6 percentage points from the same period last year. With the advantage of low manufacturing cost in Vietnam, the company's factory in Vietnam has achieved steady growth, and Vietnam will become the main body of the company's sewing motor business in the future.

The strength of talents is expected to be greatly enhanced and can be expected in the future.

At the end of June, the company announced the appointment of Dr. Niu Mingkui as general manager of the company. Dr. Niu has rich experience in the automotive industry and is also an expert in electric drive, which brings full imagination for the future business development of the company. In the first half of the year, founder Shanghai Research Institute was officially established, and the company's strength in talent and research and development will be greatly enhanced, helping the company to become one of the leading manufacturers of new energy vehicle drive systems in China.

Cover for the first time, give a "recommended" rating

It is estimated that the company's EPS from 2018 to 2020 will be 0.24,0.32 and 0.41 yuan respectively, and the price-to-earnings ratio of the corresponding stock price will be 26 times, 19 times and 15 times respectively. The company's performance is under pressure in the short term, but the company's strategy is clear, it looks forward to the layout of the new energy vehicle drive system, and is optimistic about the company's development potential in the long run. Cover for the first time and give a "recommended" rating.

Risk hint

1, the natural gas engine fell faster than expected; 2, the motor business of new energy vehicles was lower than expected; 3, the price of raw materials rose sharply.