Weifu Hi-Tech (000581): Long-term drag on performance due to increased investment income The gross profit margin of the business rebounded

Weifu Hi-Tech (000581): Long-term drag on performance due to increased investment income The gross profit margin of the business rebounded

1Q19 results were lower than expected Weifu Hi-Tech’s 1Q19 results: operating income.

700 million, previous interest rate 5%; net profit attributable to parent company 6.

9 ‰, an average of 12% a year, which is equivalent to 0 profit.

68 yuan.

The company’s investment income was affected by the market’s breakthrough expansion, and its performance exceeded expectations.

Development trend Investment income has increased significantly, which is the biggest drag on performance.

Affected by the heavy truck and passenger car market, investment income in the first quarter of 19 increased by at least 27% to 4.

500 million US dollars, the biggest drag on the company’s breakthrough in performance.

1Q investment income accounted for 59% of total profit, while growth in 18% accounted for 75%. The company’s main business accounted for an increase in profitability.

At the same time, the company’s revenue is also affected by the market’s digestion of inventory vehicles, at least 5% to 22 per year.

700 million.

Raw material prices fell, gross margins rebounded, and expense ratios increased slightly.

Due to the decline in raw material prices and we expect the company’s high gross profit ratio of air intake systems to increase, the company’s 1Q gross profit margin is 22.

1%, rising by 1 every year.

2ppt.

Under the decay of scale effect, the company’s management expense ratio and R & D expense ratio increased by 0, respectively.

6ppt, while the sales expense ratio and financial expense ratio improved slightly.

The company’s cash is still sufficient, and the market is expected to benefit from the elimination of country three and the switch of country six.

In the first quarter of 19, the company’s operating cash flow increased by zero.

6 ppm to 1.

4.5 billion US dollars, the company’s currency cash + wealth management products are close to 7.5 billion U.S. dollars, which is expected to continue to support the company’s high dividend and outbound investment layout.

Initially, we expect that the heavy truck market is expected to benefit from the accelerated elimination of National III 淡水桑拿网 and the switching of National VI, which will lead to sales growth.

Earnings forecast We have adjusted our forecasts for the company ‘s investment income and expense ratio, and lowered our earnings forecast for the 19/20 years by 10% and 13.

5% to 24.

400 million and 2.5 billion.

Estimates and recommendations The company currently sustainably corresponds to August 19/20.

7/8.

5x P / E, maintaining the recommended level, but due to lower earnings forecasts, we have lowered Weifu Hi-Tech’s target price by 13% to 24.

8 yuan, corresponding to 10 in 19/20.

2/10 times P / E, 18% room compared to current expectations.

(B shares correspond to 5.

6x / 5.

5x 19e / 20e P / E, cut the target price of Solvay B by 13% to 16.

9 releases, corresponding to 6.

2x / 6.

0x 19e / 20e P / E, 10% upside.

) Sales of 上海夜网论坛 risk heavy trucks and passenger cars exceeded expectations.

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