Guanghui Automobile (600297) Interim Review: New Car Sales Gross Profit Shifted After Sales Derived Stable Development

Guanghui Automobile (600297) Interim Review: New Car Sales Gross Profit Shifted After Sales Derived Stable Development

Event Overview The company released the 2019 Interim Report: 2019H1 achieved revenue of US $ 80.7 billion, a year-on-year increase of 3%; net profit attributable to mothers was US $ 1.5 billion, a breakdown of 28%, and net profit after non-attribution to mothers was US $ 1.4 billion, a decrease of 27%; ROE 4%, a decrease from the same period last year.

80 units.

Among them, the second quarter of 2019’s revenue was US $ 43.4 billion, an increase of 12% year-on-year; net profit attributable to mothers was 7 euros, an increase of 28% year-on-year.

  Analysis and judgment: New car sales: Emissions upgrade to clear National V inventory, lowering the overall gross profit margin.

  In 2019H1, the company achieved sales of 430,000 new cars, a year-on-year increase of 6%. At the same time, the passenger car industry interval decreased by 14%. The company’s sales growth was mainly due to: 1) optimization of the brand structure.

As of the reporting period, the company operated 840 outlets (among which 776 4S stores) in 28 regions across the country, covering 50+ brands; in response to the trend of automobile consumption upgrade, the company strengthened the layout of luxury brands (currently 230 luxury brand 4S stores), brandsStructure optimization drives the company’s sales and revenue to grow against the trend; 2) Development of online channels.

The company has deep cooperation with the e-commerce platform. According to the number of reports, the company has achieved 150,000 units of online electricity sales, accounting for up to 35%, an increase of 0 compared with the same period last year.

6 units.

In 2019H1, the company’s comprehensive gross profit margin was 10%, a decrease of 0 compared with the same period last year.

The six averages are basically: 1) Engine emissions upgrade, large-scale cleanup of National V inventory in the second quarter of 2019, resulting in changes in new car 北京夜生活网 gross profit. The comprehensive gross profit margin in the second quarter of 2019 decreased by 1 compared with the first quarter of 2019.

2 units; 2) Funds tightened and the cost of capital for auto finance leasing business increased.

  After-sales service: The maintenance business has grown steadily, and the derivative business has advanced steadily.

  1) Maintaining steady growth.

In 2019H1, the company achieved 4.01 million repairs, an annual increase of 3%; maintenance revenue was US $ 7.5 billion, an annual increase of 2%.

The company has continuously improved the “huiyang car” service platform through strong basic customer resources and industry-leading ERP management system. In 2019H1, there are 430,000 new registered users, 370,000 online orders, and a turnover of 600 million US dollars.

2) Insurance improves penetration.

Relying on the industry-leading “insurance cloud” platform, the first car insurance rate of the company in 2019H1 reached 77%, an increase of 2 over the same period last year.

9 units.

  3) Second-hand cars play a scale effect.

Car source is the core advantage of second-hand cars. Based on strong customer resources, the company achieved 150,000 dealer transactions in 2019H1, an annual increase of 8%, and a penetration rate of 0.

6 up to 36%; Guanghui International Automobile Trade, a wholly-owned subsidiary of the company, has been granted second-hand car export qualifications, and can focus on the development of second-hand car exports in the future.

4) Non-performing rate of financing lease control.

The company’s 30-day overdue and 90-day non-performing rates were controlled at 1.

59% and 0.

75%, lower than the industry average.

  Improved cash flow and optimized asset and liability structure.

  2019H1 operating indicators improved: 1) Operating cash flow was -7.3 billion, a significant improvement from -13.6 billion in the same period; 2) Asset-liability ratio also started from the same period last year.

4% down 1.

7 up to 65.

7%, debt structure has been optimized, reflecting the company’s ability to refine management.

  Investment suggestions: In 2019H2, the national five clearing stocks are exhausted, the passenger car industry is gradually recovering under the base effect, terminal discounts are narrowing, driving the company’s new car sales profitability to be repaired, and new car gross profit is improving; at the same time, after-sales and derivative businesses have grown steadily.

It is estimated that the company’s net profit attributable to its parent in 2019-2021 will be 29/40/47 trillion, and the EPS will be 0.

35/0.

49/0.

57 yuan, corresponding to PE is 11/8/7 times.

With reference to the Shenwan Automobile Service II Index PE (TTM) of about 17 times, we believe that the company is a leader in the industry and its performance is stable. We give the company 12 times PE in 19 years with a target price of 4.

2 yuan, the first coverage given “overweight” rating.

  Risk warnings Downside risks in the passenger car industry; operating risks caused by rising financing costs; gross profit improvement of new car sales in 2019H2 is less than expected; and the risk of non-performing loans is increasing.