Sanhua Intelligent Control (002050): The gross profit margin has increased significantly, and new energy orders are abundant, reflecting the flower of management

Sanhua Intelligent Control (002050): The gross profit margin has increased significantly, and new energy orders are abundant, reflecting the “flower of management”

1H19 results exceeded our expectations. Sanhua Smart Control announced 1H19 results with revenue of 58.

3 ‰, an annual increase of 4.

31%, net profit attributable to mother 6.

93 ppm, a ten-year increase2.

35%, net profit after deduction 6

42 ppm, 10-year average4.

82% yuan.

Corresponds to 2Q19 revenue of 30.

500 million a year.

2%, net profit attributable to mother 4.

30,000 yuan, an annual increase of 1.

3%, after deducting non-return to mother’s net profit fell slightly.

8%.

In the second quarter of 19, gross profit margin improved significantly month-on-month, as performance exceeded our expectations.

Development Trend In the short term, gross profit margin and cash flow from operating activities have improved significantly from the previous month, reflecting the “flower of management.”

The company’s gross profit margin in the first quarter was 25.

2%, the lowest in the past 4 years, but the gross profit level in 2Q quickly rose to 31.

1%, the same month improvement of 3.

4ppt / 5.

9ppt.

We believe that there are four main reasons for the improvement in gross profit margin. 1) From the perspective of revenue structure, the proportion of high-margin auto-zero businesses has increased.

5ppt to 13.

11%; 2) Thanks to the strong sales of the new energy model in 1H19, the gross profit margin of the auto-zero segment has been increased by 2.

7ppt; 3) 2Q19 is better than 1Q19 RMB and the US dollar exchange rate has improved and depreciated; 4) More importantly, in the face of a flat production and sales environment in the air-conditioning industry, the company achieved price pressure upstream and upstream to achieve 1H19 refrigerationThe gross profit margin of the sector increased by 0 compared with the same period last year.

35ppt.

At the same time, due to better inventory control, the net cash flow from operating activities in 2Q19 reached 5.

500 million, an increase of 121% / 95% from the same period last quarter, reflecting the company’s excellent management capabilities.

New energy vehicles have abundant orders on hand, and the R & D expense rate has increased accordingly.

The company mentioned in its investor relations activities that it has received orders for new energy platforms such as Volkswagen, Daimler, BMW, Volvo, PSA, etc. We expect the company to have orders close to 13 billion yuan by 2024. It is expected that orders will start to land in 2020, Can guarantee the company’s new energy business in recent years high 天津夜网 growth.

The company’s R & D expense ratio in the second quarter increased by 0 from the previous quarter.

9/0.

5ppt to 4.

5%, with the corresponding increase in the depth of project reserves.

Earnings Forecasts and Estimates Although the new energy vehicle environment is facing many policy changes, we believe that there are two obvious trends. 1) It is expected that the growth rate of joint venture car companies in the next year will exceed that of autonomous car companies; 2) the importance of new energy thermal management systemsFurther improvement.

We keep the profit forecast for 2019 unchanged and slightly increase the profit forecast for 20201.

5% to 16.

900 million.

The current consensus is 20/2019/2020.9 times / 17.

5 times price-earnings ratio.

Maintain Outperform rating and 16.

A target price of 00 yuan corresponds to 31.

2x 2019 P / E ratio and 26.

1x 2020 price-earnings ratio, 49 from the previous previous.

1% upside.

Risks: Inventory depletion in the air-conditioning industry in 2H19 is intensified; new energy vehicles from joint venture car companies have fallen short of expectations.