Feike Electric (603868) 2018 Annual Report Comments: E-commerce and Price Increase Bonus Decline 19 Years Results Will Improve

Feike Electric (603868) 2018 Annual Report Comments: E-commerce and Price Increase Bonus Decline 19 Years Results Will Improve
Event: Feike Electric released the 2018 annual report with revenue of 39.800 million (+3.2%), net profit attributable to mother 8.4.5 billion (+1.1%), EPS 1.94 yuan.Revenue for the fourth quarter of 201811.600 million (-2.7%), net profit attributable to mother 2.2.4 billion (-4.8%), single-quarter revenue and profits have increased, slightly lower than market expectations. The dividend plan is to pay 15 yuan for every 10 shares, and the cash dividend rate is still as high as 77%. Opinion: The e-commerce and price increase bonuses have declined, the growth rate of traditional categories has declined, and even some e-commerce stockpiles have been delayed to 18Q4, replacing the contribution of new domestic appliances, and the company’s 18Q4 revenue is still -2.7%, 2018H2 company’s revenue is only double +1.4%, lower than market expectations. We believe that the e-commerce dividend is coming to an end, and the increase in the average price of traditional categories has narrowed, but the company’s new growth point has not yet matured. By channel, the online / offline channel revenue in 2018 was 21.6 ppm / 18.2 trillion, each year +7.2% /-1.2%, online growth from 35 in 2017.5% excellence dropped to 7 in 2018.2%, 2018H2, e-commerce revenue has not increased significantly, the e-commerce channel dividend is approaching the end, and after the offline channel has been adjusted, the revenue has achieved a small number growth again. In terms of brands, the vPro brand’s revenue increased by 50% in 2018.4% to 3.800 million US dollars is the main revenue increase. The revenue of Feike brand is basically flat. The proportion of vPro in total revenue has increased to 9.5%.In 2018H2, the revenue of the vPro brand increased by 34% in ten years, which is an improvement over 2018H1 (+ 84%). In terms of products, the shaver earns 27.3 ‰, +4 a year.6%, of which volume and price are +6.3% /-1.6%, hair dryer income 6.1 ‰, +3 for ten years.2%, of which the volume and price are +1.3% / + 1.9%, the income of electric hair clippers, hair ball implanters and other old categories (electric irons, etc.) were put into -3.3% /-1.1% / 5%, overall, because the average price has not achieved a significant increase, the company’s traditional products such as razors and hair dryers grew at a faster rate.The total income of new domestic appliances listed at the end of September 2018 was 17.27 million yuan, which temporarily contributed less. In summary, the significant e-commerce dividend in the past few years is coming to an end. At the same time, the average price increase of traditional categories has narrowed, revenue has entered a stage of steady growth, new categories of consumer electronics have temporarily contributed, and the company’s future product structure needs to investContinuous upgrade, sustainable must bear the cultivation of new categories and new channels. The average price is stable and the gross profit margin is basically the same. The “sport year” sales expense rate rises and the profitability is stable. In 2018, due to the rapid growth of the vPro brand, the average price of razors did not significantly increase, and the decrease in gross profit margin was small.2pct.The prices of major raw materials, steel and plastics fell in 18Q4, and the decline in gross profit margin in the single quarter narrowed better than that in 18Q3. It is expected that the positive trend will continue. On the expense side, the company gradually increased television advertising, and the sales expense ratio was increased by +1 on the basis of reduction in 2017.1pct, the management expense rate / R & D expense rate is +0 respectively.3pct / -0.1pct, the current investment income increased, and the final net interest rate fell only slightly.4pct to 21.2%. The significant increase in accounts receivable and inventory was due to changes in operations. There is no significant risk. Accounts receivable at the end of 2018 was 5.500 million, an increase of 2 at the end of 2017.USD 900 million, of which the accounts receivable of the top five customers (mainly e-commerce customers) increased by 1.2 million US dollars, the remaining burden of receivables increase mainly due to the company’s new procurement company in 2018 to increase the proportion of raw materials collection and procurement, co-founders to purchase raw materials from the company’s increased receivables. Inventory reached 5 at the end of 2018.600 million US dollars, an annual increase of 70%, one is that the company optimizes dealer inventory and decreases, and the other is that new appliances such as domestic appliances and plug-in boards are listed, and the company’s stock increases. Due to the combined effect of the increase in accounts receivable and inventory, the company’s operating net cash flow in 2018 was alternately inserted by 36%.It is expected that due to business needs, accounts receivable will still increase in the future, but e-commerce customers and cooperative foundries operate stably and there is no risk of impeding bad debts.Through new product reorganization and dealer inventory optimization, the problem of rapid inventory growth will be alleviated. Performance outlook: The 19-year performance is expected to be significantly better than the 18-year revenue outlook: the conversion of e-commerce and the price increase bonus are nearing completion, and the company’s traditional categories have entered a stage of stable growth. According to the company’s pricing strategy, it is expected that the future growth rate will remain at 5Between 10%, plug-in boards and household appliances are expected to contribute a significant increase in 2019, and the expected revenue growth rate is about 10% or higher, and the growth rate in the first half of the year is expected to show a trend of low before high. Net profit outlook: According to the company ‘s advertising plan, as there are no major sports events in 19 years, the sales expense ratio is expected to decline, and the company ‘s industrial chain pricing power is very strong. It is expected that the reduction from 16% to 13% will be significant.Promote the company’s profitability. It is expected that the profit growth rate in 19 years will be faster than the revenue growth rate. To build future growth capabilities, the two major strategic directions need to be accelerated. The traditional categories of the company have clearly entered a stable growth stage. In the 西安耍耍网 long run, the company needs to accelerate the construction of future growth capabilities. The two strategic directions of category diversification and internationalization need to be accelerated. 品类多样化:公司已积累的渠道优势和供应链能力,品类多样化是变现上述优势,打开内销空间的可行战略,公司已于2018年上市加湿器,吸尘器等生活电器品类,并于2019年 早期Launch of patch panels and health scales. Internationalization: With cross-border e-commerce as the breakthrough point in 2018, the company has cooperated with cross-border e-commerce such as Global Easy Shopping, Tongtuo and overseas e-commerce, and has developed overseas distributors in the United States, Europe, South Korea, Vietnam and other countries.In 2018, overseas sales revenue reached 24.3 million yuan, with private brands accounting for 60%. Investment suggestion: The company’s 18Q4 performance exceeds market expectations. Benefiting 都市夜网 from the volume of new products, cost control and tax reduction, it is expected that the company’s 19-year revenue and profit growth will improve. In the long run, the company’s traditional categories will enter a stable growth stage.The two strategic directions need to be accelerated.Maintain 2019/20 EPS forecast to 2.32/2.50 yuan, plus EPS forecast for 2021 is 2.70 yuan, corresponding to PE 20/19/17 times, maintaining the “overweight” level. Risk Warning: 1. Intensified market competition; 2. New product launch feedback was less than expected.