JIANGLING MOTORS(000550/200550):POSTS 3Q18 LOSS DUE TO WEAK SALES AND HIGH EXPENSES

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:2018-10-25

3Q18 results in line with expectation

    Jiangling Motor (JMC) reported a 12.80% YoY fall in revenue to Rmb5.903bn and a net loss of Rmb100mn or Rmb0.12/sh in 3Q18 due to weak sales volume, vs. Rmb90.6278mn earnings in 3Q17. The results are in line with the company’ preannouncement.

    Trends to watch

    Weak sales volume the primary cause for first quarterly loss; R&D and sales expenses elevated. 3Q18 sales volume declined 18% YoY or 30% QoQ, while revenue dropped 12.8% YoY or 24.4% QoQ amid weak sales volume in the passenger vehicle industry and price wars.

    Sales volume of JMC and Ford both declining; adjustment needed in passenger vehicle segment. 3Q18 sales volume of Ford and JMC fell 21% and 4% YoY. Notably, sales volume of passenger vehicles declined 54% YoY or 32% QoQ, with that of Yusheng SUV further fell to 851 units. We think adjustment is needed in strategy and product of the passenger vehicle segment.

    New Ford model likely to bring upside potential; watch distribution channel consolidation. JMC Ford plans to launch its new SUV Territory in early-2019, which would be sold under Ford’s new nationwide sales network and is likely to contribute incremental sales volume.

    Earnings forecast

    Given the disappointing profitability and product mix, we lower our full-year estimates for sales volume and expense ratio, and cut 2018e and 2019e earnings by 49% and 46.3% to Rmb271mn and Rmb305mn.

    Valuation and recommendation

    JMC-B is trading at 20.1x 2018e and 17.9x 2019e P/E and 0.4x 2018e and 0.4x 2019e P/B. Maintain HOLD for JMC-A/-B. To reflect our lower earnings forecast, we cut JMC-A/-B’s TP by 21% and 19% to Rmb10.8 (34.8x 2018e and 30.9x 2019e P/E and 0.74x 2018e and 0.74x 2019e P/B; 9.3% upside room) and HK$8.8 (23.2x 2018e and 20.6x 2019e P/E and 0.5x 2018e and 0.5x 2019e P/B; 13.8% upside room)。

    Risks

    Upside risk from strong sales of Ford new models.