Desai Xiwei (002920): Expected increase in R & D expenses and decline in supporting volume dragged down earnings growth

Desai Xiwei (002920): Expected increase in R & D expenses and decline in supporting volume dragged down earnings growth

Event: The company announced the results of the first half of the year.

The core view performance is basically in line with expectations.

In the first half of 2019, the company realized a net profit of RMB 90 million to RMB 110 million, with an interval of about 61.

7% to 68.

The main reason for the decline in the company ‘s net profit attributable to mothers is: (1) in the first half of 2019, the production and sales of domestic vehicles in the narrow sense have deviated from the range of change, and the production and sales of some of the company’s supporting models have increased, resulting in a decrease in net profit(2)) The company’s R & D investment in the first half of 2019 exceeded the significant growth and led to a further decline in net profit.

The profit in the second quarter improved month-on-month, and the decline in the year narrowed.

The company achieved net profit attributable to its mother in the second quarter of 46.46 million yuan to 66.46 million yuan, an increase of 6 from the previous quarter.

7% to 52.

6%, 47 years ago.

5% to 63.

3%, the zoom range narrowed by 9 from the first quarter.

武汉夜生活网5 to 15.

8 units.

In the second quarter, the company’s net profit attributable to mothers increased month-on-month, and the excess margin narrowed.

It is expected that the sales growth rate of the passenger car industry in the second half of the year will be narrowed quarter by quarter, and the company’s downstream customer supporting volume will gradually increase. It is expected that the company’s profitability will further improve in the second half of the year.

The company’s intelligent driving sensors and connected cars are expected to grow rapidly in the future.

The company’s intelligent driving sensors have received orders from Geely Automobile and other companies, and its contribution to profitability will gradually increase in the future.

The Internet of Vehicles business has signed cooperation agreements with Baidu, Tencent and other companies, and has obtained new project orders from FAW-Volkswagen. Through the increase of the company’s connected vehicle models, it will become one of the important profit growth points in the future.

The value and penetration rate of the company’s smart cockpit business increased.

The intelligent cockpit has gradually penetrated from high-end models to low-end and mid-end models, and the penetration rate has increased; the development of one-core two-screens to one-core four-screens or one-core multi-screens has continued to increase the value of bicycles.

The company won orders from FAW-Volkswagen, SAIC-Volkswagen, and Geely, and its LCD instrument panel received orders from BYD, Geely, Great Wall Motor, and Guangzhou Automobile, which have become profit growth points.

Financial Forecast and Investment Suggestion: Adjust the income forecast slightly. It is estimated that EPS for 2019-2021 will be 0.

75, 0.

99, 1.

22 yuan (originally 0.

80, 1.

05, 1.

29 yuan), the comparable company is automotive electronics and parts related companies, the comparable company’s 19-year PE average valuation of 36 times, given a 36-year 19-year valuation, target price of 27 yuan, maintain a buy rating.

Risk Warning: The amount of vehicle entertainment systems, vehicle information systems and driving information systems is lower than expected, and the revenue from connected car, LCD display and ADAS businesses is lower than expected, and the demand for the passenger car industry exceeds expectations.