Dongmu (600114): Short-term pressure on gross profit margin to form new growth points for new businesses

Dongmu (600114): Short-term pressure on gross profit margin to form new growth points for new businesses

The core view performance is in line with expectations.

The company achieved operating income in the first three quarters of 13.

52 ppm, a ten-year average of 9.

8%, net profit attributable to mothers was 82.34 million yuan, an annual extension of 66.

9%, the net profit of non-attributed mothers will be 76.07 million yuan, with an annual increase of 61%, and the EPS will be 0.

13 yuan.

Realized operating income in the third quarter4.

8.7 billion, an increase of 12.

4%, an annual increase of 4.

4%, the growth rate improved by 18.

1 percentage point, revenue has improved significantly; net profit attributable to mothers is 25.26 million yuan, with each increase of 48%, the reduction narrows by 24.

4 units; 3Q gross margin shift dragged earnings.

Net profit growth in the first three quarters was lower than revenue growth mainly due to the decline in gross profit margin and the increase in expense ratio during the period.

  Short-term gross profit margin was under pressure, and cash flow from operating activities improved.

The company’s gross profit margin in the first three quarters was 24.

7%, a decrease of 8 per year.

4 averages, 3 quarters gross margin 21.

8%, a decrease of 7 per year.

2 units, a decrease of 3 from the previous quarter.

Nine levels are expected to be mainly affected by the industry as a whole.

Expenses for the first three quarters of the company16.

4%, an increase of 1 unit per year; the company’s net cash flow from operating activities in the first three quarters was 1.

9.9 billion yuan, an annual increase of 42.

5%, the inventory at the end of the third quarter was 4.

390,000 yuan, an increase of 19 over the beginning of the period.

8% of companies actively expand new business areas.

In August, the company acquired Huajing Powder Company to expand metal injection molding (MIM) technology, forming a good synergy effect with the company’s built-in technology business; the target company is mainly Huawei mobile phone MIM structural 北京夜网 parts, wearable device components, 5G routers and other products. InitiallyIt accounts for more than 65%, which brings huge market space for the company to expand its customers such as Huawei.

In the third quarter, Huawei’s mobile phone expansion reached 41.5 million units and its market share reached 42.

4%, an annual increase of 66%, continued rapid growth, driving the company’s related business growth.

Based on the main business, the company actively explores related industrial fields; and through the overall stabilization and recovery of the automotive industry, the company adjusts its customer and product structure to improve profitability in the future.

  Financial Forecast and Investment Suggestion: Adjust the income and gross profit margin forecasts slightly, and predict that EPS for 2019-2021 will be 0.

40, 0.

54, 0.

61 yuan (previously 0.

48, 0.

55, 0.

62 yuan). Comparable companies are auto parts related companies. Comparable companies have an average PE assessment of 21 times in 19 years, with a target price of 8.

4 yuan, maintain BUY rating.  Risk warning: The amount of automotive powder matching is lower than expected, the amount of soft magnetic matching is lower than expected, and the compressor powder business is lower than expected.

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