Yingqu Technology (002925): Performance continues to recover, expecting heavy e-cigarette business

Yingqu Technology (002925): Performance continues to recover, expecting heavy e-cigarette business

Yingqu Technology (002925): Performance continues to recover, expecting heavy e-cigarette business
Event: The company released three quarterly reports for 2019, achieving total revenue of US $ 2.6 billion, an increase of 29%, of which Q1 / Q2 / Q3 achieved revenue of 6 respectively.9/9.4/9.7 trillion, with a growth rate of 4.3% / 45.9% / 37%; net profit attributable to mother 6.50,000 yuan, an increase of 7 in ten years.3%, Q1 / Q2 / Q3 respectively achieved net profit attributable to mother.5/2.6/2.3 trillion, the growth rate was -9.7% / 16.2% / 11.6%; net profit after deducting non-attribution is 6.1 ppm, an increase of 9 per year.6%.Driven by the gradual recovery of external e-cigarette customer inventory, driven by the gradual increase in demand, the company’s overall performance growth gradually picked up and its performance was in line with expectations. Downstream recovery The overall gross margin rebounded, and cash flow was under pressure.The company achieved a gross profit margin of 38 in the first three quarters.7%, down by 3 per year.3pp, mainly affected by the needs of downstream customers, the company’s high gross margin e-cigarette precision plastic business accounted for a decline.However, from the third quarter report of the company’s major secondary customer PMI, IQOS smoke bomb Q3 single-quarter sales growth expanded, the company’s e-cigarette business rebound may lead to the gradual recovery of gross margin, and in the third quarter alone, the company’s gross margin was 39.5%, an increase of 1 over the first half of the month.3pp.In terms of period expenses, in the first three quarters, the company’s selling expenses were 1.4%, a decline of 0 per year.4pp; management expense ratio 4.1%, 武汉夜生活网 rising by 0 every year.5pp, mainly due to the increase in the company’s equity incentive expenses; the company continues to expand research and development expenses, the research and development expense ratio6.5%, an increase of 0 every year.8pp; In addition, due to the increase in interest income and exchange gains, the company’s financial expenses were -2.5%, down by 0 every year.1pp.In summary, the company’s net profit attributable to its parent in the first three quarters was 25.1%, a year down 4.8pp.Due to the production needs of the Malaysian factory, the company’s inventory has increased every year, and the ending inventory amount at the end of the third quarter was 5.Under the expansion of scale, the company’s account receivables increased to 12 trillion. At the same time, due to the increase in employee expenditures in the first three quarters, the company’s net operating cash flow was 1.500 million, a year-on-year decrease of 78%. IQOS is approved, and the US market listing or sales will drive the company’s performance.In April 2019, PMI heated non-burning electronic cigarette IQOS passed PMTA and obtained a sales license in the United States.In October, IQOS went on sale in Atlanta and Georgia.The United States is the world’s largest e-cigarette market. Through the continuous expansion of sales areas, IQOS may continue to increase its volume.As a secondary supplier of precision plastic parts for PMI electronic cigarettes, the company’s electronic cigarette business may benefit. Improved layout to hedge trade frictions and continued expansion of business lines.In order to hedge the impact of the trade war, the company has stepped up efforts to promote the layout of overseas production capacity, and the California and Malaysia plants have been set up.In terms of products, in the first half of the year, under the background of the electronic cigarette business being affected by the inventory cleanup of downstream customers, the company’s innovative consumer electronics business grew due to the rapid volume of home engraving machines.7%.Although the smart control business was hit by the trade war, the company continued to strengthen the depth of cooperation with core customers Logitech and Asetek, and the overall growth remained stable.At the same time, the company continues to promote the business development of automotive electronics, and a number of new products have been successfully produced in volume. Earnings forecasts and investment advice.The EPS for 2019-2021 is expected to be 2 respectively.04 yuan, 2.64 yuan, 3.33 yuan, corresponding to PE is 20 times, 15 times and 12 times.With reference to comparable companies, we give the company a 26-year PE target for 19 years, corresponding to a target price of 53.04 yuan, the first coverage, given a “buy” rating. Risk warning: the policy restrictions are tightened, the development of e-cigarette business is blocked; the Sino-US trade war continues to escalate.