Hongfa (600885) 2019 Third Quarterly Report Review： Steady Business Development Breakthrough for Major Clients

Hongfa (600885) 2019 Third Quarterly Report Review: Steady Business Development Breakthrough for Major Clients

Domestic relay leader, new energy vehicle relay made breakthroughs in major customers, maintaining the “Buy” rating.

The performance was slightly lower than market expectations. The prosperity of the home appliance and automobile sub-sectors has not yet recovered.

The company achieved the first three quarters of 2019: revenue 51.

48 ppm, +1 a year.

87%; net profit attributable to mother 5.

56 ‰, at least -5.


The company achieved the third quarter: revenue of 17.

4.1 billion, -2.

27%; net profit attributable to mother 2.

10,000 yuan, +1 chain.


The company’s overall revenue and net profit in the first three quarters were slightly lower than market expectations. First, home appliances and traditional automotive relays faced pressure from price competition and weak demand.

The gross profit margin remained at a high level, and the expense ratio remained stable.

The company’s comprehensive gross profit margin was 40 in the third quarter.

96%, a year to increase 0.

55PCT, an increase of 2 from the previous quarter.

42 PCTs, mainly benefiting from industrial control with high gross profit margin, increased sales of HVDC products.

In the first three quarters of 2019, the sales expense ratio and management expense ratio (including R & D) were 5 respectively.

15%, 15.

17%, which is increased by 0 each year.

25 PCT, 0.

45 PCT, new product development and sales promotion led to a slight increase in the expense ratio.

The company’s operating cash flow maintained a large net inflow. The operating cash flow in the first three quarters of 201915.

5.3 billion.

The company receivables, the inventory kept basically stable, and the response bills increased.

High-voltage DC enters Tesla’s supply chain, and meter retrofitting progresses.

While traditional businesses are under pressure, innovative businesses are still performing well: 1) Power relays: The power relays have been adjusted for nearly two years, the second round of state-of-the-art smart meter retrofitting has started, and the North American project is progressing smoothly (tariff exemptions have been obtained).

2) High-voltage DC: The company occupies nearly 40% of the domestic market. Benchmark customers such as Mercedes-Benz, Land Rover, Porsche, and Volkswagen have gradually delivered small batches. The Tesla project started the first batch of US production in October and is expected to become its domestic factoryMain supplier.

3) Low-voltage electrical appliances: Breakthrough core customers in North America and Europe, sustainable large orders to help steady revenue growth, plan to expand categories and upgrade processes to accelerate growth.

In addition, the company has been in industrial control for the first three quarters, and the reset of signal relays has also 杭州夜网论坛 increased significantly.

Risk factors.

The macro economy continues to decline; exchange rate risks; downstream household appliance demand substitution.

Profit forecast and estimation.

The company has been deeply involved in the relay industry for many years, devoted to the strategy of seven little giants to build a global relay leader, and at the same time, it has a proactive layout of the flooded component field and has a long-term development momentum.

Taking into account the expected recovery in the home appliance and traditional automotive industries, we cut the company’s 2019?
Net profit forecast for 2021 is 7.

2.8 billion (previous forecast 7).



680,000 yuan, change -7.

3% /-5.

5% /-3.

8%), corresponding to EPS prediction of 0.



38 yuan / share, currently 四川耍耍网 corresponding to 26/22 / 18x PE.

Taking into account the company’s global relay industry leader size and the development prospects of major customers, maintain a “buy” rating.