Farah Electronics (600563): Interim report is slightly lower than expected. The outlook for the second half of the year benefits from photovoltaic recovery.

Key Investment Events: Recently, the company released its 2019 Interim Report, and the company achieved revenue 7 in 1H19.

930,000 yuan, at least -5.

27%, net profit attributable to mothers2.

09 million yuan, a ten-year growth rate of 2.

67%, deducting non-net profit 1.

950,000 yuan, at least -6.

54%, slightly lower than expected.

In the second quarter of 19, the company achieved operating income in a single quarter4.

13 ppm, 10-year average of 8.

1%, realizing net profit attributable to mother 1.

100 million, down 6 a year.


Both growth rates were lower than the next quarter’s revenue growth rate of -1.

9% and profit growth 2.


Cash flow is good, and operating cash inflows in the second quarter of 194.

2.8 billion is higher than the income of 4.

1.3 billion, net operating 北京夜网 cash inflow1.

1.6 billion is higher than the net profit of 1.

1.1 billion.

Free cash flow remained at a high level, which was 34 million in the second quarter.

Increasing interest income reduces fees, improves efficiency, upgrades products, and maintains a stable gross profit margin.

Three fees accounted for 10 in the second quarter of 19.

5%, down 3 from the previous month.

One single, mainly due to the decline in financial costs caused by increased interest income.

The company’s continuous upgrade of new energy products and efficiency improvement are the keys to maintaining the company’s gross profit margin. The company’s gross profit margin in the second quarter was 42.

8%, an increase of 0 from the previous month.

1 average, flat for one year.

The main reason for the decline in 2Q19’s performance was the slowdown in sales of new energy vehicles and the continued weak demand for home appliances and photovoltaics.

Sales of new energy vehicles in the second quarter were 32.

250,000 vehicles, 40 per year.

9%, the growth rate is significantly lower than the first quarter of 97.

9% (China Industrial Automobile Association).

Coupled with the sluggish demand for photovoltaics for home appliances, sales of air conditioners in 2Q19 dropped by 2.

7% (Industry Online), PV increased installed capacity by 57 quarters in the second quarter.

7% (National Energy Administration), making 2Q19 company’s performance lower than expected.

Wind power photovoltaic growth is confirmed in the second half of the year, and new energy vehicles may still exceed expectations.

Looking into the second half of the year, the growth of the wind power market is determined. The introduction of the major customer Vestas has ensured the company’s long-term high growth; photovoltaic, the new installed capacity in the first half of the year was 11.4GW, last year, industry associations and third-party organizations estimated that this year ‘s new installed capacity was 35-45GW, and the installed capacity in the second half of the year will also double the growth rate; although the growth rate of new energy vehicles in the second quarter has improved, a large part isAffected by the national five promotion, there is no such factor in the second half of the year, coupled with the continuous promotion of new energy vehicle projects by overseas manufacturers, it is expected that the proportion of new energy vehicle revenue will continue to increase in the second half of the year, and it is only possible to exceed expectations.

Representatives of high-quality companies, with bright prospects for new energy and a lower limit of historical range, maintain a “Buy” rating.

Farah Electronics is a representative of high-quality companies. ROE is maintained at more than 17% throughout the year, and free cash flow accounts for more than 15% of revenue.

We are optimistic about the company’s competitive advantage in the industry and the demand for thin film capacitors in the future photovoltaic wind power and new energy vehicle markets.

We expect the company’s net profit to be 4 in 2019-2021.

85, 5.

34 and 6.

2.2 billion, corresponding to PE of 19.

55x, 17.

75x and 15.

24x, maintain “Buy” rating.

Risk warning events: domestic new energy vehicle sales, overseas new energy vehicle launch progress is gradually expected; photovoltaic demand recovery progress is slow; home appliance market destocking rhythm is gradually expected