JIANGLING MOTORS(000550/200550)RESULTS REVIEW:PER VEHICLE EARNINGS DECLINING; WATCH ORDER DELIVERY IN THE NEAR TERM

类别:公司 机构:中国国际金融股份有限公司 研究员:Wei FENG/Danlin REN 日期:2018-08-30

1H18 results in line with expectation

    JMC’s 1H18 revenue fell 8.8% YoY to Rmb14.29bn; recurring attributable net profit declined 60.6% YoY to Rmb150mn and attributable net profit dropped 42.3% YoY to Rmb319mn or Rmb0.37/sh. 2Q18 revenue was Rmb7.81bn (+3.9% YoY and +20.4% QoQ) and attributable net profit was Rmb165mn (-49% YoY and +7.6% QoQ), in line with preannouncement.

    Trends to watch

    2Q18 earnings fell sharply YoY due to a high base; gross margin rose slowly QoQ. 2Q18 gross margin declined 7ppt YoY due to changing accounting principles and adjusting product mix, weighing on 2Q18 earnings growth.

    Passenger vehicle business continued to sharply decline and per vehicle earnings dropped. 1H18 total sales volume dipped 5% YoY to 143,000 units. Distribution channels and products continued to weigh on passenger vehicles, and sales volume of Ford SUV and Yusheng tumbled 40% and 77% YoY. Portion of commercial vehicles in total sales volume climbed 10ppt to 80%.

    Watch order delivery for electric light trucks in 2H18 and launch of new Ford SUV in 2019. JMC launched its first electric light truck Kairui EV in April, and has secured orders for 7,100 units. We expect order delivery to drive >10% growth in sales volume of light trucks in 2H18.

    See page 3 for details.

    Earnings forecast

    Given declining per vehicle earnings, we lower 2018e and 2019e earnings by 15.2% and 17.1% to Rmb533mn and Rmb568mn.

    Valuation and recommendation

    JMC is trading at 11.3x and 10.6x 2018-19e P/E. Maintain HOLD on JMC-A/B. Given earnings forecast revisions, we cut JMC-A/-B’s TP by 15% and 17% to Rmb13.6 (22x 2018e and 20.6x 2019e P/E, 18% upside) and HK$10.8 (14.2x 2018e and 13.4x 2019e P/E, 26% upside)。

    Risks

    Intensifying competition; disappointing sales volume.