Guanghui Automobile (600297): The increase in expenses mainly dragged down the gross profit margin of new cars

Guanghui Automobile (600297): The increase in expenses mainly dragged down the gross profit margin of new cars

1H19 results are in line with expectations. Guanghui Automobile announced 1H19 results: operating income of 373.

0 million yuan, five years average.

5%, net profit attributable to mother 8.

0 ppm, a ten-year average of 28.

4%, net profit of non-attributed mothers 8.

60,000 yuan, an 武汉夜生活 average of 20 years.

9%.

Basically in line with our expectations.

The development trend is affected by the auto market. The revenue is prolonged, and the rapid rise in expense ratio is the main drag.

The company’s 1Q19 net profit reduction was mainly due to the slump in the auto market, and its revenue decreased by 5%.

2 trillion, the cost rate increases by 1 every year.

2ppt.

Among them, financial expenses were affected by the increase in capital costs and the expansion of expenditures (the company’s long-term and short-term borrowings increased by 56 compared with the initial period.

600 million), increasing by 2.

1 trillion, the cost rate increased by 0.

64ppt.

The maintenance service volume increased steadily, and the gross profit margin of new cars rebounded month-on-month.

In terms of 都市夜网 business, the company’s maintenance service revenue increased by 8% each year, and the gross profit margin increased by 1.

7ppt to 33.

14%, gross profit ratio increased by 4.

4ppt to 29%, making a solid contribution to profitability.

New car sales were affected by changes in the passenger car market, and sales decreased by 1.

8% (The total sales of passenger cars increase by 13 each.

8%), revenue per unit of revenue is reduced by 7%, and gross profit margin is extended by 0 per degree.

4ppt to 4.

44%, but up by 1 from the previous month.

31ppt reflects that through the reduction of terminal inventory, some brand discounts are gradually recovered at the same time, and the gross profit margin of new car sales continues to improve.

Store acquisitions are mostly concentrated in 2H18, and it is expected to gradually contribute to the increase, and the issuance of convertible bonds will gradually optimize the capital structure and return of value.

Looking ahead, most of the company’s acquisitions of stores last year focused on the complete completion of 2H18, and the personnel structure and business integration will take some time. It is expected that this year will begin to gradually contribute to the increase.

The company intends to issue 31.

200 million convertible bonds, of which 1.5 billion US dollars are used for share repurchases, and the remaining funds are used for store and information construction upgrades to promote the reasonable return of the company’s internal value and improve the company’s overall operating efficiency.

Earnings Forecast Considering that the company’s gross profit margin is expected to continue to rise, we raise the company’s 2019 / 20e earnings forecast7.

5% / 7.

1% to 37.

300 million / 41.

300 million.

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

6x / 9.6x P / E.

Maintaining the recommendation level and synchronizing with the profit forecast adjustment, we raise our target price by 7% to 6.

0 yuan, corresponding to March 19/20.

0x / 12.

0x P / E, compared with current expectations of 24%.

Risky passenger car sales fell short of expectations.