Central Plains Distribution (002448): Revenue decline narrows, gross margin continues to fall

Central Plains Distribution (002448): Revenue decline narrows, gross margin continues to fall

The third quarter results were in line with market expectations. Zhongyuan Internal Distribution released 3Q19 results: 11 in the first three quarters.

1 ‰, at least -7.

6%, net profit attributable to mother 1.

24 ppm per year -36.

8%, corresponding to 3 quarter income3.

7 ‰, at least -2.

4%, net profit attributable to mother is 30.04 million yuan, -55.

1%, basically in line with market expectations.

Development trend income narrowed and non-recurring gains and losses increased.

The revenue in the third quarter achieved a slight annual 西安耍耍网 decrease, and the decrease of 21% in the second quarter improved. We expect that overseas business revenue will still have a double-digit decline due to changes in passenger car demand in the US market, while domestic business revenue will improve, mainly due to commercial vehicle demand.Warm up.

In the third quarter, non-recurring gains and losses reached 13.42 million yuan (20.57 million yuan in the first half), of which 8.79 million yuan was the asset disposal gain. The sale of the wholly-owned subsidiary Mengzhou Youwumei Real Estate Real Estate Co., Ltd. received a gain.Financial assets investment income of 2.1 million yuan.

Growth in gross profit margin declined, and sales and management expenses remained high.

The company’s gross profit margin decreased by 28 in the third quarter.

0%, a significant decline of 10 per year.

3ppt, down 6 from the previous month.

8ppt, we think there are two main reasons for the decline in gross profit growth. One is the impact of weaker downstream demand in the domestic market, and the increase in pressure on auto companies to reduce prices. The other is the increase in costs due to the Sino-US trade friction and tariffs.The impact of tariffs on the company’s highest profit is in the range of 5-6 million US dollars.

In terms of expenses, sales expenses and management expenses were increased by +17 in the third quarter.

1%, +13.

8% to 33.6 million yuan, 49.95 million yuan, R & D costs slightly decreased to 8.41 million yuan, affected by other factors of stricter product quality control, the absolute amount of sales and management expenses still increased, and the decline in income scale led to an increase in expense ratio.

Long-term expenditures increase, while capital expenditures decline, ensuring healthy cash flow.

Despite the net profit margin, net cash inflows in the third quarter were 88.82 million yuan, operating cash flows were still positive, and cash receipts were available4.

10,000 yuan, mainly from long-term loans from 3.

9 trillion increased to 7.

2 megabytes, budget fixed asset expenditures fell to 2,377 megabytes, and open source and cost reductions ensure healthy cash flow.

In fact, due to changes in the exchange rate of the RMB against the US dollar, foreign exchange earnings have a positive contribution to cash flow, which was +6.74 million in the first 3 quarters.

Looking forward to the profit forecast and forecast, we expect domestic and foreign market demand to recover in the fourth quarter, but the pressure of price cuts and tariff increases will still be under pressure, and the gross profit margin will be under pressure, and the company’s medium-to-long-term growth will still depend on breakthroughs in extended business expansion.

Maintain 2019 and 2020 earnings forecasts unchanged.

The current contradiction corresponds to 19th of 2019.

4x price-earnings ratio.

Maintain Neutral rating and 4.

The target price of 80 yuan corresponds to a 17/15 times P / E ratio of 2019/2020, which is gradually 11 compared to the current one.

8% of downside space.

Risks Sino-US trade frictions intensify; outreach is hindered.