Lake Electric (603355): Increased revenue and depreciation of RMB drive profitability

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Lake Electric (603355): Increased revenue and depreciation of RMB drive profitability

Lake Electric (603355): Increased revenue and depreciation of RMB drive profitability
Affected by the external sales business, Q3 revenue increased, and the depreciation of the RMB drove profitability to increase. In the first three quarters of 2019, the company achieved total operating revenue.10,000 yuan (YoY-1.2%), gross profit 11.10,000 yuan (+7 compared with the same period last year).2%), gross margin of 26.3% (+2 year-on-year.1 pct), net profit attributable to mother 3.800 million (+13 year-on-year.0%), net interest rate 9.1% (+ 1% year-on-year.1pct).  Q3 single-quarter operating revenue of 14.200 million (YoY-1.6%), gross profit 3.900 million (+ 9% year-on-year.2%), gross margin of 27.5% (+2 year-on-year.7pct), net profit attributable to mother 1.500 million (+ 9% year-on-year.3%) and a net interest rate of 10.3% (+ 1% year-on-year.0pct).  In 武汉夜网论坛 Q3, the increase in revenue was mainly affected by external sales.Profit growth is faster than income growth, thus: Q3 gross margin increased by 2.7pct, specifically: lower, higher proportion of domestic sales of higher gross profit margins, driving higher gross profit margins; conversion, the decline in the value of Renminbi (USD) compared to the same period last year, will also lead to higher gross margins.At the same time, the company increased R & D investment and increased the R & D expense ratio2.1 point to 5.6%. The purpose of overseas factories is to help improve internal sales business, and at the same time expect internal sales business to gradually improve external sales business: due to the impact of Sino-US trade friction, external sales business growth is weak, but on August 28, 2019 the company announced its intention to establish a subsidiaryTo expand overseas production capacity, the company will better cope with future turbulent trade environment.  Domestic sales of independent brand business: It is expected to gradually improve in the future, mainly through: 1) Expanding more products.On the basis of small household electrical appliances, the company added a new small household electrical appliance this year; 2) Expansion of channels: The company continues to increase the national market coverage, optimize the structure of agents, and continue to expand specialty stores. Investment recommendations We expect: 1) Internal sales: The penetration rate of small household appliances such as vacuum cleaners will gradually increase. At the same time, the company will continue to develop its own brand business by expanding online and offline channels to promote the promotion of market share; 2) Export: conversionThe improvement of the export sales environment is expected to resume good growth; 3) The price of raw materials has dropped and profitability has improved.Based on this, we predict that the net profit attributable to mothers for 2019-2021 will be 4.8, 5.2, 5.700 million, the previous growth rate was 13%, 8%, 10%, the latest closing price corresponds to 17 in 2020.3 times PE, with reference to comparable company estimates, given the company 18xPE in 2020, corresponding to a reasonable value of 23.22 yuan / share, maintaining the “overweight” rating. Risk reminders: exchange rate fluctuations, original growth index, sluggish overseas economy, intensified competition in the vacuum cleaner market, changes in the penetration rate of small household appliances, and weak channel expansion.

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