Kaizhong (603037) Third Quarterly Report Review: Low Revenue Stabilizes Internationalization and Opens Growth Space

Kaizhong (603037) Third Quarterly Report Review: Low Revenue Stabilizes Internationalization and Opens Growth Space

Event: 2019Q1-Q3 achieved revenue 3.

7.3 billion (decade-10).

18%), net profit attributable to mother 0.

740,000 yuan (-31 for the whole year.

8%).

Among them, 2019Q3 revenue was 1.

1.3 billion (-9).

12%), net profit attributable to mother 0.

140,000 yuan (-39 for the whole year.

57%).

Core views: 1) The company’s revenue stabilized with the low sales of passenger cars, and the net profit attributable to mothers dropped significantly.

In the first three quarters, 杭州夜网论坛 the single-year operating income growth rate was -8 in ten years.

26% /-13.

2% /-9.

12%, the increase rate of net profit attributable to mothers was -7.

1% /-45.

26% /-39.

57%.

In the first three quarters, passenger cars gradually sold 15.24 million units (-11 years.

65%), the single-quarter sales growth rate was -13.

77% /-14.

34% /-6.

04%, the company’s revenue is highly correlated with the prosperity of the downstream industry, the sales of converted passenger cars gradually stabilized, and the company’s revenue will gradually stabilize.

2) The decline in product prices has led to a downward acceleration in gross and net profit margins.

The company’s single quarter comprehensive gross margin and net profit margin were 28 respectively.

36% and 12.

25%, a decrease of 10 from the previous month.

2pcs and 6.

2pcts, the company’s gross margin and net profit rate accelerated downward.

The decline in gross profit margin was mainly due to the development trend of the automotive industry and intensified market competition. The OEMs shifted the pressure of price reduction to upstream component companies, which caused the company’s product prices to decline.

3) The future high growth of core business + new business + international layout opens up the company’s growth space.

The company plans that the core shock absorption business will achieve a domestic market share of 50% and a global market share of 30% within 5 years.

The automotive electronic control business has developed several EPB products and is expected to enter the supplier directory of a OEM this year.

The company will establish production bases in North America and Europe, build global supporting supply capabilities, and open up growth space for the company.

4) Maintain the overweight rating.

According to the current profit forecast, the company’s EPS in 19/20/21 is 0.

76/0.

88/0.95 yuan, 28% / 23% / 24% lower than the previous forecast, respectively, and dynamic price-earnings ratios are 22/20/18 times.

The company has mastered the core technology of polyurethane shock-absorbing components, and the customer development has been very effective. New business operations and international layout in the future will open up the company’s growth space. The current company estimates that it is reasonable and maintains an overweight rating.

5) Risk warning.

Passenger car production and sales exceeded expectations for the time being; new business expansion failed to meet expectations.