Baolong Technology (603197): Performance is in line with expectations and optimistic about the rebound in growth in 2019

Baolong Technology (603197): Performance is in line with expectations and optimistic about the rebound in growth in 2019

Revenue growth has been stable, and net expenses have increased in the short term due to increased expenses.

The company released its 2018 annual report and initially achieved operating income23.

50,000 yuan, an increase of 10 in ten years.

77%; net profit attributable to mother 1.

55 ppm, a decrease of 10 per year.

93%; gross profit margin 32.

92%, a decrease of 2 per year.

44 units; net interest rate 8.

79%, a decrease of 2 per year.

01 averages.

In 2018, the company’s revenue grew steadily, while the decrease in net profit was subject to additional tariffs imposed by the United States.

220,000 yuan, 890.

98 million), overseas market expansion (overseas market service fee increases 1493 annually).

910,000 yuan), management costs increased (labor expenditure increased by 4278).

850,000, including 940 of equity incentive expenses.

08 thousand yuan), factors such as rising raw material prices.

The traditional advantageous business maintained steady growth, and the growth rate of TPMS business improved.

(1) Exhaust system pipe fittings (tailpipes and hot end pipes) and valve nozzles are the company’s traditional advantageous businesses. Gradually increasing revenue continues to achieve steady growth: valve valves gradually realize sales revenue.

91 ppm, a ten-year increase of 7.

49%; exhaust system fittings achieved sales revenue8.

1.7 billion, an annual increase of 8.

08%.

(2) The TPMS business was affected by the increase in sales of some supporting models, and the revenue growth exceeded expectations: TPMS gradually realized sales revenue5.

48 ppm, a ten-year increase of 11.

53%.

The company’s TPMS supply vehicles are mainly self-owned brand SUVs. In 2018, due to the downward impact of the domestic auto market, sales of self-owned brand SUVs were disrupted, resulting in a decline in revenue growth of the block.

(3) Revenue from other businesses such as sensors and lightweight products maintained rapid growth: sales revenue from other businesses1.

650,000 yuan, an increase of 27 in ten years.

47%.

Benefiting from the formal implementation of national mandatory installation regulations, the TPMS business is expected to return to rapid growth.

The compulsory installation regulations for domestic passenger car TPMS have been officially implemented from January 1, 2019, and the penetration rate of TPMS will accelerate from about 50% to 100% from 2019 to 2020.

The company ‘s TPMS investment capacity has been in place by the end of 2018, and the construction of Hefei Park is about to begin in 2019. After reaching the production capacity, the company’s total power generation of TPMS transmitters and controllers has expanded from about 10 million and 2 million to over 25 million and3.5 million, an increase of 237 over the existing capacity.

5%.

Baofu Electronics, a joint venture established between the company and Huo Fu Group, has already landed in the early stage. By integrating the resources of both parties, the new company is expected to become one of the global TPMS market leaders.

If we consider factors such as policy promotion, capacity release, and strong alliance with the Huofu Group, we expect the company’s TPMS business to return to rapid growth in 2019.

Automotive electronics and lightweight business will become the company’s medium- and long-term focus.

(1) In terms of automotive electronics, the company’s sensor business has been awarded by SAIC Passenger Cars, Shenlong, Chery and other customers for a number of projects. Benefiting from the implementation of the National Six emission standards, pressure sensors related to the National Six standards are expected to obtain more project pointsRevenue may maintain rapid growth; 360 ° surround view system has been designated by the Geely project and is expected to start mass production in 2019; millimeter wave radar and dynamic vision system will be used to support Yutong buses in the future.

(2) In 杭州桑拿网 terms of light weight, the company’s lightweight structural parts have been matched to some customer models such as Volvo, Cadillac, Geely, etc. At present, the volume of revenue is still small, but it is growing rapidly.The above-mentioned large-scale business has ample room for growth, and it is expected to take over TPMS in the future, which will become an important driving force for the company’s continued long-term performance growth.

Investment suggestion: As the industry gradually picks up, TPMS business returns to rapid growth, and new businesses such as automotive electronics and lightweight are gradually heavy. From 2019, the company is expected to enter the medium-high-speed growth track.

We forecast the company’s annual revenue from 2019 to 2021 to be 1.

26 yuan, 1.

66 yuan and 1.

76 yuan, return on net 天津夜网 assets were 17 respectively.

6%, 20.

2% and 18.

9%.

Maintain “Buy-A” investment rating.

Risks: Lower-than-expected production and sales of automotive by downstream customers; slower-than-expected arrival of new automotive electronics products; substantial increase in raw material prices; exchange rate changes.