Gree Electric (000651): Operation is still stable, governance structure is improved, restructuring forecast

Gree Electric (000651): Operation is still stable, governance structure is improved, restructuring forecast

This report reads: The trend of improvement in industry demand in 2019 is clear, the company as a leader competes prominently, and profitability promotes improvement.

With the advancement of mixed reforms, the improvement of the governance structure is expected to bring about a restructuring of the revenue system.

Overweight.

Investment Highlights: 深圳spa会所 Maintain Overweight rating.

We believe that the trend of improvement in industry demand in 2019 is obvious, and the company has the advantages of outstanding competitiveness and improved profitability as a leader.

Under the weak demand of the 18H2 industry, the company’s financial accounting scale is conservative, and the EPS forecast for 2019/2020 is lowered to 4.

86/5.

47 yuan (originally 5 yuan).

39/6.

16, -10% /-11%), and the EPS forecast for 2021 is 6.

23 yuan.

With the advancement of mixed reforms, the improvement of the governance structure is expected to improve the introduced architecture. With reference to the average valuation of the industry, the company will be given 15xPE in 2019 and the target price will be raised to 72.

9 (original 44.

4 yuan, + 64%), “overweight.

The 18-year and 19-Q1 results were 杭州桑拿网 basically in line with expectations.

Operating income in 2018 was 2000.

200 million (+33.

6%), net profit attributable to mother 262.

0 million yuan (+17.

0%), gross profit margin 30.

9% (-2.

7pct), net interest rate 13.

2% (-1.

8pct).

Q4 single-quarter operating income was 494.

300 million (+32.

1%), net profit attributable to mother 50.

800 million (-26.

7%).

19Q1 single quarter revenue was 405.

500 million (+2.

5%), net profit attributable to mother 56.

700 million (+1.

6%), gross margin of 30.

6% (-0.

3pct), net interest rate 14.

0% (-0.

1pct). Fees were fully accrued in 2018, and revenue in 19Q1 grew steadily.

The proportion of non-air-conditioning business in 2018 increased by 4.

6pct to 21.

4%, resulting in a decline in gross profit margin.

The 18H2 industry’s demand is under pressure, the company’s revenue has grown against the trend, and its expenses have been fully accrued, which is the leader in the company’s profitability in 2018 under pressure.

In the same period, 19Q1 achieved steady growth and its profitability gradually stabilized.

The improvement in industry demand in 2019 is clear, and profitability has improved.

As the industry leader, the company has outstanding competitiveness, the mean value of sales volume and product structure has improved, and inventory risks will gradually be eliminated.

It is expected that the company’s expected revenue will grow steadily in 2019, and the profit margin will see an inflection point in Q2-Q3. The dividend rate is expected to increase further after the distribution is completed.

Core risks: Mid-term recovery trend of first- and second-tier real estate, termination of company equity transfer

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