The 3Q performance in 2018 was lower than expected.
Founder Motor announced 3Q performance in 2018: 1-3Q realized revenue of 931 million yuan, up 5.96% from the same period last year; net profit belonging to the parent company was 56.915 million yuan, down 34.1% from the same period last year. Among them, the operating income in the third quarter was 336 million yuan, which was basically the same as the same period last year; the net profit belonging to the parent company was 12.425 million yuan, down 57.9% from the same period last year; and the net profit after deducting 12.022 million yuan was down 58.1% from the same period last year. The decline in profits is too large, which is lower than we expected.
Trend of development
The growth of new energy business is blocked, and the overall gross profit margin of the motor industry is under pressure. The company's gross profit margin fell 1.2ppt in the third quarter and 4.4ppt in the same period last year. As we have mentioned in many reviews of motor enterprises, motor assembly and manufacturing is a relatively weak link in the new energy industry chain, which is subject to the dual pressure of downstream subsidies and fluctuations in upstream raw materials. as a result, the gross profit margin is not expected to rebound in the short and medium term.
Haineng gas locomotive is expected to continue to decline. According to the first commercial vehicle data, China's natural gas heavy truck market produced a total of 29600 in the first three quarters, down 56 per cent from the same period last year. We estimate that the company's marine natural gas engine is expected to decline by 40%, 50% in the first three quarters.
The volatility of expense rate is high and it is difficult to keep stable. In the first three quarters, the sales expense rate was 1.7%, 2.5%, 4.6%, and the management expense rate was 10.7%, 10.5%, 5.5%, respectively, which fluctuated greatly from the previous quarter. The higher sales cost 3Q shows that the enterprise tries to further expand the market in the predicament and reduces the R & D and administrative expenses to a certain extent, which makes the management fee lower.
Profit forecast
The natural gas engine business has fallen sharply, and the gross profit margin of the new energy business is under pressure. we will lower the 2018 Universe 19e profit forecast by 33.1% from 0.26 to 0.28 per share to 0.17 to 0.14.
Valuation and suggestion
The current share price corresponds to the 18Universe 0.9 times Pmax B, maintaining a neutral rating, and in response to the earnings forecast downgrade, we cut the target price by 29% from 8 yuan to 5.7 yuan, corresponding to 1 times PB in 18 / 19, which is still 8.6% room to rise from the current stock price.
Risk
The downside risk caused by the rapid rise in raw material prices and the upside risk caused by the stabilization and rebound of natural gas engines in the fourth quarter.