GAC Group (601238): Guangfeng, Guangben’s self-sustained short-term pressures against adverse growth

Core view performance was slightly lower than expected.

The company achieved operating income of 142 in the first quarter of 2019.

56 ‰, 25 years ago.

7%, net profit attributable to mother 27.

78 ‰, 28 years ago.

4%, net of non-attributed net profit22.

100,000 yuan, an average of 41 for ten years.

9%, EPS is 0.

27 yuan.

The lower growth rate of net profit was mainly due to the decline in gross profit margin.

The gross profit margin dropped on average and stabilized quarter-on-quarter.

Gross profit margin for the first quarter was 12.

4%, a decrease of 12 per year.

2 units, an increase of 0 from the fourth quarter of 2018.

6 units.

Period expenses13.

0%, a small increase of 0 a year.

2 units with a sales expense ratio of 5.

3%, a decrease of 2 per year.

Four single, mainly due to the corresponding reduction in production and sales of logistics storage costs and advertising costs; management expense ratio (including research and development costs) 7.

3%, an increase of 2 per year.

5 units, of which R & D expenses increase by 48 per year.

2%.

Net cash flow from operating activities was -60.

310,000 yuan, -12 in the same period last year.

4 billion, the net molecular weight increased by 386.

3%.

80 at the end of the first quarter.

170,000 yuan, an annual increase of 132 at the end of the first quarter of last year.

3%.

Benefiting from Guangfeng Guangben’s profitable growth, investment income is increasing every year.

The company achieved investment income of 25 in the first quarter.

68 ppm, a five-year increase of 5.

0%, of which investment income from associates and joint ventures is 25.

$ 4.5 billion, an annual increase of 4.

7%, GAC Toyota and GAC Honda are expected to achieve positive growth.

In the first quarter, Guangfeng sold 16.

180,000 vehicles, an increase of 45 in ten years.6%; Guangben sales 18.

770,000 vehicles, an increase of 11 in ten years.

4%, which are far higher than the industry average.

During the Shanghai Auto Show, Guangfeng replaced Ralink to start pre-sale, C-HR EV made its debut, and new models such as Guangben Odyssey Rui hybrid were released.

It is expected that Guangfeng and Guangben’s sales in 2019 are expected to be better than the industry average.

Sales of GAC’s own brands are expected to achieve steady growth.

During the Shanghai Auto Show, new models such as GAC Trumpchi GA6 and GAC New Energy Aion S were launched for the first time. In 2019, GAC publicly launched a variety of independent brand products such as Trumpchi GM6, GS8 remodeling, GS4 replacement, pure electric exclusive B-class SUV.

Sales of GAC’s own brands are expected to achieve steady growth.

The financial forecast and investment recommendations slightly adjust the gross profit margin and expenses, and the EPS is expected to be 1 in 2019-2021.

12.1.

27, 1.

44 yuan (originally 1.

18, 1.

30, 1.

44 yuan), with reference to comparable companies’ estimates, given the company 13 times PE in 2019 with a target price of 14.

56 yuan, maintain BUY rating.

Risk Warning: Sales of GAC passenger 上海夜网论坛 cars, Guangfeng, Guangben, and Guangfeike are lower than expected risks, and the demand of the passenger car industry exceeds expected risks.