Event
On August 22, 2019, Changhong, Sichuan released the 2019 semi-annual report.
The company's 2019H1 achieved a total operating income of 39.967 billion yuan, an increase of 3.45% over the same period last year; a net profit of 51 million yuan, a decrease of 68.20% over the same period last year; and a net profit of-46 million yuan, a decrease of 150.71% over the same period last year.
From a quarterly point of view, the company's single-quarter Q1/Q2 revenue in 2019 was 200.70 yuan and 19.897 billion yuan respectively, up 5.85% and 1.15% respectively over the same period last year; the net profit returned to the mother was 0.48 yuan and 3 million yuan respectively, down 6.63% and 97.14% respectively from the same period last year; and the net profit after deducting non-return was 0.11 yuan and-57 million yuan respectively, down 59.12% and 187.54% respectively from the same period last year.
Brief comment
1, Q2 revenue growth slowed down slightly, traditional home appliances under pressure, IT, kitchen and bathroom became the bright spot 2019H1, the company achieved business income of 39.967 billion yuan, an increase of 3.45% over the same period last year.
Of this total, Q2 achieved revenue of 19.897 billion yuan in a single quarter, an increase of 1.15%. Dragged down by the overall downturn in the home appliance industry in 2019, the growth rate is slightly slower than 19Q1. From the main business point of view:
1) the color TV business has declined greatly: the revenue of 19H1's TV business reached 5.198 billion yuan, a decrease of 17.80%. With the deterioration of the competitive environment in the domestic TV industry and the serious homogenization of products, the fierce price war in the retail market in recent years has had a great impact on the operation of the company. Retail sales of domestic color TVs fell 12.85 per cent to 94.4 billion yuan in the first half of 2019 compared with the same period last year, with the average price of products falling 27.35 per cent to 2897.43 yuan per unit, according to Zhongyikang.
2) the performance of air conditioners and refrigerators stabilized, and the total revenue of 19H1's air conditioner refrigerator products reached 8.039 billion yuan, an increase of 2.63%. According to Zhongyikang statistics, retail sales of domestic air conditioners and refrigerators fell by 9.51% and 0.65% to 2004 and 70.6 billion yuan respectively in the first half of the year. The upgrading of domestic white power structure has entered a bottleneck period, the company actively promotes product upgrading and product marketing, and achieves positive growth under the background of industry scale growth and pressure.
3) the unsalable ice pressure products fell, and the revenue of 19H1's intermediate products reached 9.99 billion yuan, down 13.85% from the same period last year, mainly due to overcapacity in the global refrigerator and compressor industry, disorderly competition in the industry, and the overall sales of ice pressure products were not as expected. Overseas, the established compressor giants Skopp and Embraco have been sold one after another. The company overcomes the difficulties of declining profits and price war in the industry as a whole, and the scale of production and sales still ranks first in China.
4) IT kitchen and bathroom products have become a bright spot. 19H1's kitchen and bathroom products achieved sales of 350 million yuan, an increase of 30.44% over the same period last year. The company's kitchen and bathroom volume is still small, but it still achieved eye-catching growth in the market environment of declining annual kitchen and electricity growth in the first half of the year. In terms of IT products, the company achieved revenue of 11.207 billion yuan in the first half of the year, an increase of 25.51%. It continues to maintain a leading position in the field of domestic distribution services, and has a strong channel advantage, market ability and perfect service system covering the whole country.
2. The profitability has declined, the gross profit margin has declined slightly, and during this period, the overall cost has stabilized and the profit end of Q2 company has declined greatly. The company's 2019Q1/Q2 realized net profit of 0.48 yuan and 3 million yuan respectively, down 6.63% and 97.14% respectively, and deducted non-return net profit of 0.11 yuan and-57 million yuan respectively, down 70.29% and 187.93% respectively. It is mainly affected by the decline in the profitability of the home appliance industry under the background of the macroeconomic downturn, the regulation and control of the real estate market and the severe international trade situation, and the adverse changes in the forward exchange rate under the high base of the previous period. 19H1 achieved a comprehensive gross profit margin of 11.96%, a year-on-year reduction of 0.23pct, with color TV sets falling 3.12pct due to the intensification of downward retail prices; white electricity products with a slight increase in gross profit margin, set-top boxes benefiting from lower purchasing costs, and gross profit margins increased by 12.09pct.
In terms of the period expense rate, 19H1's sales expense rate was 6.70%, an increase of 0.14pct over the same period last year; the management expense rate (including R & D) was 3.56%, an increase of 0.09pct over the same period last year, mainly due to a large increase in the company's R & D investment; and the financial expense rate was 0.34%, a decrease of 0.48pct over the same period last year, due to the increase in interest and exchange earnings in the current period.
3. Promote the reform of industries and channels and speed up the pace of transformation.
In the face of the severe market situation and business situation, the company has carried out changes in its business and channels. In terms of industry, the company rearranges the industrial layout, removes inefficient industries, emphasizes the accumulation of resources and promotes the adjustment of business structure; in terms of channels, with retail as the core, the company optimizes and integrates the domestic marketing system to promote the efficiency of ToC marketing transformation; in terms of operation, the company promotes subordinate industrial units to improve turnover efficiency, cash flow control and inventory receivable efficiency.
4. Innovation leads to actively implement, new industrial park plus emerging intelligent manufacturing technology, 2019H1 color TV business relies on the company's mature and advanced manufacturing system, realizes the software and hardware layout of intelligent manufacturing line with "IE+IT+AT" technology framework, and further enhances intelligent manufacturing capacity; in terms of white electricity products, the listing of innovative revolutionary products represented by "comprehensive thin" series and "M Xiansheng" series has brought a new atmosphere to the industry. In terms of ice pressure products, the company continues to create the world's leading compressor research and development platform to maintain the leading edge of refrigerator compressor efficiency, small size, frequency conversion and other core technologies.
In terms of capacity expansion, the company announced in May 2019 that it intends to invest 1.903 billion yuan to build an intelligent manufacturing industrial park intelligent display terminal project, which will further enhance the company's production efficiency and market competitiveness after completion. It is expected to achieve an annual production capacity of 6 million smart display terminals, 7 million digital TV and Internet of things terminal equipment, while upgrading the supporting processing capacity of front-end plastic pressing, stamping and precision patches.
Investment suggestion: the company is an established state-owned enterprise in the home appliance industry, with a wide range of business layout, steady transformation and upgrading, and looking forward to the improvement of the company's profits in the future. We temporarily give the company an outlook for 2019. The company is expected to have an income of 84.95 billion yuan in 2019, an increase of 1.88% over the same period last year, and the net profit of its mother was 58 million yuan, down 82.11% from the same period last year. The company's black electricity business faces some uncertainty and is covered for the first time and will not be rated for the time being.
Risk tips: the intensification of competition in the home appliance industry, the development of trade war is not as expected, and the impact of adverse exchange rate fluctuations.