Wanhe Electric (002543): Extended export to the 深圳桑拿网 United States leads to extended revenue

The 3Q19 results were lower than we expected the company’s 3Q19 results: 47 operating income in the 1Q to 3Q19.

94 ‰, a decrease of 9 per year.

4%; net profit attributable to mother 4.

460,000 yuan, an increase of 20 in ten years.

9%, corresponding profit 0.

60 dollars.

Among them, 19Q3 operating income was 12.

42 trillion, down 18 a year.

6%; net profit attributable to mother 1.

160,000 yuan, an increase of 25 in ten years.

9%; net profit after deduction is 0.

68 ppm, at least -5.

2%.

In the current period, the company received the highest government subsidies, driving the growth of net profit.

However, the company’s operating performance was lower than our expectations, mainly due to the extension of exports to the United States.

  Continuous growth in exports to the United States: The company’s exports to the United States are highly dependent, accounting for more than one-third of total revenue in 2018.

Major exports to the United States have been levied a 25% tariff. At present, no overseas base for export to the United States has been established, resulting in a significant tilt in exports.

  Increased domestic sales share: 1) In the context of the overall segmentation of the kitchen appliance and water heater markets, the company’s online retail sales have grown significantly due to the cost of its products.

2) 3Q19 million and gas water heaters, large kitchen appliances online increased 19% / 32% in the first half of the year.

  Financial analysis: 1) Gross profit margin of 35 in 19Q3.

6%, an increase of 2 per year.

1ppt is mainly due to the increase in the structural share of domestic sales and the devaluation of the RMB.

2) The company controls costs, 3Q19 sales expenses, management expenses, and research and development expenses for each 10% decline in total, the change is weaker than revenue, mainly due to higher internal business expense ratio.

3) Net cash flow from 1-3Q19 operating activities9.

06 ‰, previously + 219%, a marked improvement over the same period last year.

  Development Trend The company faces continuous pressure on US exports; although domestic sales benefit from the positioning of brand 杭州夜网论坛 value, they will still face the substitution effect of overall market demand substitution.

  Earnings forecasts and estimates take into account that the company’s operations exceeded expectations, but there was a one-off government subsidy in the third quarter of 19, maintaining the 2019 EPS forecast of 0.

77 yuan, down 2020 EPS forecast 9% to 0.

81 yuan.

Currently corresponds to December 2019/2020.

6 times / 11.

9 times price-earnings ratio.

Maintain Neutral rating and lower TP by 9.

0% to 10.

22 yuan, corresponding to 13.

3x 2019 P / E ratio and 12.

6 times 2020 price-earnings ratio, 5 more recently included.

7% upside.  Risks: Sino-US trade friction risks; risk of fluctuations in demand for water heaters and kitchen appliances caused by the real estate cycle.