Yutong Bus (600066) in-depth report-policy environment warming is expected to be repaired

The company is an absolute leader in the field of passenger cars, but due to the decline of the subsidy policy for new energy buses, the company’s gross profit margin and net profit margin were 27 in 2016.

8%, 11.

4% continued to fall to 23 in the first three quarters of 2019.

4%, 6.

4%, elderly people continue to reduce performance, it is estimated to be suppressed.

Looking ahead, the industry’s competitive landscape will be further optimized, and the 杭州桑拿网 company’s profitability is expected to bottom out and rebound.

At the same time, the supplementary policy environment is warming up. Through the redistribution of receivable receivables, it is expected that the company’s dividend ratio will increase in the future, the distribution rate will further increase, and it will bring about income repair.

We believe that the company’s reasonable estimate is 15 times PE under expected earnings, with a target market value of 45 billion U.S. dollars and maintain a “Buy” rating.

Review: Since 2019, the company is expected to increase by 24%, obviously lagging behind the broader market, and market expectations are likely.

Affected by the decline in subsidies for new energy vehicles and the continued deterioration of the bus industry’s prosperity, the company’s breakthrough rose 24%武汉夜生活网 so far in 2019, which is significantly behind the Shanghai and Shenzhen 300 Index (+ 38%).

The current market expectations are very low. In the future, it is expected that the receivables from the receivable countries will be replenished, the company’s balance sheet will shrink, and the period rate will be reduced. The company’s profitability will promote the recovery.

Status: The company’s profitability is at the bottom of history, and the policy environment is warming.

The company’s gross profit margins for 2016/2017/2018 / 3Q2019 were 27.

8% / 26.

32% / 25.

33% / 23.

42%, the current gross profit margin is close to the main traditional bus cycle in 2014; the net profit attributable to mothers is 11 respectively.

4% / 9.

54% / 7.

33% / 6.

44%, the current net interest rate is close to the historical bottom with around 2009.

From a competitive perspective, the peer’s Zhongtong Bus / Golden Dragon 3Q2019 net profit margin is 1.

15% / 0.

80% is at the breakeven point, indicating that the industry’s profitability has bottomed out, and the company’s profitability is significantly better than that.

At the same time, the recent policy environment for new energy vehicles is picking up, and the company’s profitability is expected to pick up.

Outlook 1: Cash flow improves, balance sheet shrinks, and ROE is expected to be repaired.

At present, the company’s new energy bus subsidies for receivables are about US $ 10 billion, which is expected to recover in the next 2-3 years, and the company’s balance sheet is expected to shrink.

Considering the company’s current production capacity6.

50,000 vehicles, too many, no large capital expenditure needs in the short term.

At the same time, the company’s cash flow continues to improve, and the company is expected to increase its dividend ratio.

Calculated based on 80% / 60% / 40% of the rebate as a dividend, the company’s ROE efforts have increased from 12% in 2019 to 33% / 27% / 23%, respectively.

Outlook 2: Domestically maintained high levels; overseas markets are expected.

In 2019, the company has a total of 37 buses over 7 meters.

1%, ten years +1.

6pct, continues to maintain a high level, and is expected to improve slightly in the future.

In terms of overseas markets, European passenger car sales have been stable at 30,000 units / year, and Chinese companies have replaced the European market share of only about 5%, which has a lot of room.

At present, the company actively lays out high-end models. U12, T13, and ICE12 have won three awards, including the “Busworld Design Award” at the Brussels World Bus Expo, and the company’s competitiveness in high-end products has been demonstrated.

As of July 2019, Yutong’s cumulative vehicle sales in the entire European region exceeded 8,000 units. In the future, the company’s products will become high-end and intelligent, which is expected to continue to break through the European high-end market. Risk factors: New energy bus sales are lower than expected; the cost of power batteries has fallen less than expected; new energy vehicle policy fluctuations.

Investment suggestion: Considering the recovery of the policy environment, the cost reduction during the replenishment period, and the optimization of the competition structure, the company’s net profit return to motherhood in 2021 is raised to 29.

7.5 billion (previous forecast was 26.

1.3 billion), maintaining the 2019/2020 attributable net profit forecast20.

62/24.

6.3 billion.

The company is an absolute leader in the field of buses. Through further optimization of the industry competition pattern, the company’s profitability has bottomed out, the overlapping policy environment has warmed, and it has been replaced by receivable compensation payments. It is expected that the company’s dividend ratio will increase in the future and the yield will increaseRaise estimates for older people.

We believe that the company’s reasonable estimate is 15 times PE under expected earnings, with a target market value of 45 billion U.S. dollars and maintain a “Buy” rating.