Hongfa shares (600885): Performance in line with expectations High-voltage DC will meet domestic and overseas resonance

Hongfa shares (600885): Performance in line with expectations High-voltage DC will meet domestic and overseas resonance

This report reads: The company’s 2018 performance is in line with expectations, of which high-voltage DC relays continue to maintain a rapid growth trend, and the company’四川耍耍网s high-voltage DC relay business that transforms overseas car companies is expected to welcome resonance at home and abroad.

Investment Highlights: Maintain Overweight rating.

In the short term, due to the overall factors of the industry, the company’s growth rate has been improved, and the EPS for 2019-2020 is reduced to 1.

07 (-0.

13), 1.

29 (-0.

16) Yuan, EPS is expected to be 1 in 2021.

59 yuan.

With reference to the current industry average forecast level, the company is given a 34X PE in 2019, and the target price is raised to 36.

4 yuan (original target price of 32 yuan), maintain overweight rating.

Performance is in line with expectations.

The company achieved operating income of 68 in 2018.

800 million, an increase of 14 in ten years.

28%; net profit attributable to mothers was 70,000 yuan, a year-on-year increase of 2.

02%; net profit after deduction is 6

45 ppm, an increase of ten years.

87%, the performance is in line with expectations. The company ‘s gross profit margin was slightly shifted due to exchange rate changes, rising costs, and product price adjustments.

In 2018, the company’s product gross profit margin was 37.

12%, of which the gross margin of relay products is 38%, shortened by 3 respectively.

33% and 3.

49%, the overall profitability is still maintained.

We believe that the initial decline in gross profit margin includes: 1) the impact of exchange rates on the recognition of the company’s overseas business income (overseas business accounted for 40%); 2) the increase in original costs and the adjustment of some product prices affect product gross profit margins.

High-voltage DC relays continue to exert force, and will meet the resonance of domestic and overseas markets in 2019.

The company’s high-voltage DC relay gross margin is higher than the average gross margin of the relay. Downstream customers include mainstream companies such as BYD, Geely, BAIC, etc., and have established a strategic cooperation relationship with CATL. We estimate that the company’s high-voltage DC relay has a domestic market share of more than 40%.
In terms of overseas customers, the company has also designated and expanded well-known overseas car companies, and gradually gradually supplied the company’s high-voltage DC relays to achieve resonance at home and abroad.

Risk warning: New energy vehicle sales are less than expected, exchange rate changes