Top Group (601689): 19Q3 performance improved quarter-on-quarter; Tesla domestic main beneficiaries

Top Group (601689): 19Q3 performance improved quarter-on-quarter; Tesla domestic main beneficiaries

Opinion focus is raised to outperform industry investment recommendations. Top Group releases third quarter report for 2019. Revenue and profit have improved month-on-month. We believe that the worst time has passed. Converting Geely’s production and sales recovery and Tesla’s domestic supporting project volume will restoreGood growth, upgraded to outperform industry rating.

The reasons are as follows: 3Q19 revenue improved sequentially; gross profit margin stabilized and rebounded.

Revenue in the third quarter of 1913.

3 ‰, the ten-year average of 3.

9%; single quarter gross margin of 25.

4%, an increase of 0 from the previous month.

4 points.

  Period costs increase by 1 each year.

2 points; 3Q19 returns to mother’s net profit 1.

27 ‰, 29 from the previous decade.


Net operating cash flow for the third quarter of 19 2.

In the third quarter of 19, the company’s capital expenditure was only 1.

5 trillion (compared with the same period last year).


  Since the beginning of this year, due to the consolidation and consolidation of new production capacity of downstream customers, the company’s production capacity has turned into a low level. In the future, downstream production and sales of downstream customers will pick up and new projects will be put into production. The 成都桑拿网 company’s profitability is expected to gradually rise.

  Geely’s production and sales gradually picked up, helping the company gradually come out of the trough.

3Q downstream OEM customer output recovery has overlapped with orders on the GM GEM platform, and the company’s revenue decline has narrowed.

Among the major customers, Geely, GM Wuling and SAIC passenger car 3Q output were -14 respectively.

8% / 6.

3% /-7.

3%, some improvement in the second quarter earlier.

Looking forward, Geely’s terminal performance is getting better month by month. In September, the strong insurance card is only placed at 8 per year.

5%, we expect its production and sales are expected to gradually turn positive in 4Q. Geely, as the top customer, has a revenue share of nearly 40%. The improvement in Geely’s production and sales will help the company’s performance to stabilize and rebound.

  The company is one of the main beneficiaries of Tesla’s localization.

Recently, Tesla’s Shanghai plant has entered trial production. According to the plan, the output will reach 100,000 and 250,000 units in 2020 and 2021, respectively. Top’s supply includes shock absorption, sub-frames, chassis structural parts and interior trim.The amount of bicycles is more than 5,000 yuan, so the revenue contribution of Tesla’s Shanghai plant in 2020 and 2021 will reach 500 billion and 12.

5 ‰, if the net interest rate is 15%, it will contribute 75 million yuan and 1.

8 ppm net profit increase.

  What makes us different from the market?

We believe that pessimistic expectations have been reflected.

  Potential catalyst: Tesla’s localization is progressing smoothly.

  Earnings forecasts and estimates The company’s current expectations correspond to 2019 and 202022, respectively.

2x and 16.

2xP / E, we raised our 2019/20 profit forecast by 0% and 9 respectively.

9% to 5.

1.3 billion and 7.

20,000 yuan.

We believe that the commissioning of Tesla’s Shanghai plant will provide a benchmark catalyst, raising the target price by 17% to 14 yuan (30% upside) from 12 yuan, corresponding to 29x and 21xP / E in 2019 and 2020, respectively.  Risk industry recovery was lower than expected; Geely’s sales continued to decrease.