Jiechang Drive (603583) Company Comments: Performance continues to grow and blue ocean market leads the way
Investment Highlights Event: Jiechang Drive released the 2019 semi-annual report, and the company achieved revenue in 2019H1.
500 million, an increase of 36% in ten years; net profit attributable to mothers1.
50,000 yuan, an annual increase of 42.
6%; net profit after deduction of non-return to mother 1.
300 million, an annual increase of 23%.
The company achieved revenue in the second quarter alone3.
7 ppm, an increase of 24 in ten years.
7%; net profit attributable to mothers was 91.02 million yuan, a year-on-year increase of 43.
2%; net profit of 72.47 million yuan after deduction of non-return to mother.
The gross profit margin was basically stable, and the expense ratio increased slightly.
2019H1 company’s comprehensive gross profit margin 41.
9% for one year.
2pct; where Q1 / Q2 gross margins are 42.
1% / 41.
7%, a ten-year average of 3.
9pct / boost 2pct.
In the first half of the year, the company’s sales expense ratio was 8.
1%, increase by 1 every year.
Management expenses (including R & D expenses) rate 11.
9%, increase by 1 every year.
The research and development expenses are RMB 34.92 million, which is increased by 65 every year.
1%, indicating that the company continues to pursue and promote the development strategy of R & D first to build a competitive advantage.
Finance expense ratio -0.
6%, a decline of 0 per year.
Financial expenses include interest income of 4.04 million yuan (600,000 yuan in the same period last year) and exchange loss of 450,000 yuan (1.23 million in exchange gain in the same period last year).
Net profit of the company in the first half of the year 23.
1%, increase 1pc in one year.
The Q1 / Q2 net interest rates are 21 respectively.
2% / 24.
7%, a ten-year average of 1.
8 pieces / lift 3.
The main lines have broad prospects, and industry trends have helped the company grow rapidly.
By product: 1) Smart office: From 2013 to 2017, the company’s smart office revenue was 0.
3.3 billion, increased to 5.55 ppm with a CAGR of 75.
Affected by the healthy concept, the global smart office linear drive system will exceed 20 billion US dollars in 2021, and it is expected that the compound growth will exceed 20% in 2018-2021.
2) Medical 北京桑拿会所 health care: The company’s CAGR of revenue from 2013 to 2017 is 10.
11%, driven by the aging population, the global linear drive market is expected to reach USD 6.3 billion in 2021, and the CAGR will be 21 in 2017-2021.
3) Smart Home: CAGR of revenue from 2013 to 2017 was 22.
39%, affected by consumption upgrade, it is estimated that by 2022, the number of smart home reservations will reach 300 million units, with annual composite materials exceeding 15%.
Competitive customers build barriers to competition, and relocation of production capacity avoids tariff risks.
From the perspective of revenue structure, 80% of the company’s revenue comes from overseas, and it is estimated that more than half of its sales to the United States.
At present, the company has established strategic cooperation with Steelcase, Herman Miller, The Human, HAT Contract, Ergo Depot (Fully) and other customers in the United States to provide equipment for Google, Microsoft and other well-known enterprises.
As the company’s exports to the United States are included in the tariff list, the relocation of production capacity has also become the main way to avoid tariffs.
At present, J-star in the United States has already released part of its production capacity. At the same time, it has set up a production base in Malaysia in an attempt to gradually avoid tariff risks by relocating production capacity.
Equity incentives boost morale and bind performance growth.
The scale of the report, the company granted 2 million shares to 93 directors, senior management personnel, core technical and business personnel, accounting for 1 of the company’s total share capital.
66%, the grant price is 20.
93 yuan / share.
The conditions of exercise are that the income from 2019 to 2022 exceeds the growth rate of not less than 30%, and the profit exceeds the growth rate of not less than 20%.
Effectively bundle employee benefits with company growth.
Investment suggestion: We predict that the company will realize net profit attributable to mothers in 2019-2021.
45 ppm, an increase of 28 in ten years.
4%, the corresponding EPS is 1.
Maintain the “overweight” rating.
Risk warning: the risk of sluggish demand in foreign markets, the domestic market penetration rate is less than expected, the risk of rising raw material prices, the risk of exchange rate changes