Top Group (601689): Downturn in the industry under pressure, optimistic about lightweight and automotive electronics

Top Group (601689): Downturn in the industry under pressure, optimistic about lightweight and automotive electronics

Event: The company released the semi-annual report for 2019, and the operating income of the company in H1 201924.

38 trillion US dollars, an average of 20 per year.

7%; net profit attributable to mother 2.

$ 1.1 billion, an average of 51 over ten years.

76%; deduct non-attributed net profit1.

$ 9.9 billion, at least 49 per year.

25%; basic profit income is 0.

2 yuan.

Key points of investment: lower gross profit margins, increased R & D expenses and management expenses, and foreign revenue growing against the trend.

27 ppm, accounting for 95% of total revenue, with a gross profit margin of 24.

28%, a decrease of 3 from the previous year.

1 average.

In the first half of the year, the sales volume of Geely’s main customers, SAIC-GM, etc. were replaced by 15% and 12 respectively.

91%, due to the sluggish sales of OEMs and increasing cost control, the company’s products are facing pressure to break through price cuts, and the decline in product prices has led to a decline in revenue and gross profit margin.

R & D expenses in this period1.

US $ 5.3 billion, an annual increase of 9.

5%; affected by the increase in depreciation of the plant, leading to an annual increase in management expenses of 12.

6%; net cash flow from operating activities improved, this period was 5.

4.8 billion, an annual increase of 95.

87%.

Affected by the decline in domestic car sales, domestic revenue for the period18.

01 billion, 29 years before.

39%, foreign income 5.

2.6 billion, an annual increase of 9.

29%.

The supply of lightweight chassis systems to Tesla, electronic vacuum pumps and smart brake systems have growth potential in the first half 南宁桑拿 of the shock absorber business, and revenue from chassis systems decreased by -15.

38%, -15.

49%, the range of budget business income exceeds the range of total revenue.

Through the acquisition of Fedona, the layout of the lightweight chassis system has been improved, and it has entered the Tesla supply system.

Revenue from smart brake systems in the first half of the year 31.

67%, electronic vacuum pumps began to contribute performance.

The company’s smart brake system has continued to increase investment in research and development, and the fundraising project has progressed smoothly. It is expected to benefit from the rapid development of new energy vehicles and intelligent driving.

For the first time, it is recommended to give a “recommended” rating. The company’s net profit attributable to shareholders of listed companies will be 5 in 2019/2020/2021.

5.5 billion / 6.

7.2 billion / 7.

2.7 billion yuan, EPS is 0.

53 yuan / 0.

64 yuan / 0.69 yuan, corresponding to the current estimated P / E estimated levels of 21X / 17X / 16X, respectively.

The company has long-term binding with Geely, SAIC-GM and other large customers, leveraging the lightweight and intelligent development trend of automobiles, the future lightweight chassis and automotive electronics business are expected to contribute incremental performance.

Covered for the first time and given a “Recommended” rating.

Risk Warning: The sales volume of the car is less than expected; the advancement of investment projects is less than expected.