标题：Shenzhen Inovance Techology Co. Ltd(In line with expectations；cut EPS on marginsEV subsidy overhaul
发布日期：2016-04-15 8:56:34
内容： What surprised us Shenzhen Inovance released FY15 earnings on April 11 post market close,with revenue/net profit expanding 24%/21% yoy, largely in line with GHe.Excluding the impact from a lower effective tax rate to 7.9% in 2015 (due toemployee stock option expense impact) vs 11% in 2014, operating profitincreased by 20% yoy, which was 6% lower than our expectations, withgross margin missing our estimate by 1.7pp. As each major segmentrevenue was largely in line, we attribute this miss to likely lower thanexpected gross margins in the fast-growing rail/new energy segment.Looking into 2016E: 1) for the new energy segment, we expect the newlogistics vehicle controller and charging pile products to contribute 6% of2016E total revenue and to provide a buffer against a temporary orderdelivery delay in 1Q16 due to escalating government overhaul on EVsubsidy programs; 2) for the rail segment which mainly provides tractionsystems for subway lines in cities, including Suzhou, we forecast a 7-12%revenue contribution in 2016E-18E after the subsidiary (Kingway) wasconsolidated since 2H15. However with a c.30% GPM from the segment, vsInovance’s previous blended GPM of c.50%, we expect slightly decliningmargins into 2018E. Overall, we now expect 21%/18% revenue/EPS CAGRin 2016E-2018E from 24%/21% previously. What to do with the stock We lower 2016/17/18E EPS by 7-12% to reflect declining gross profitmargin and the ongoing government’s EV subsidy overhaul. We cut our12-month 2017E EV/GCI-CROCI/WACC based TP by 5% to Rmb50.92.Maintain Buy. Key risks: Further shrinking margins caused by competitionor weaker-than-expect cost control; less favorable government support forthe NEV industry.
发布日期：2016-04-15 8:56:34
内容： What surprised us Shenzhen Inovance released FY15 earnings on April 11 post market close,with revenue/net profit expanding 24%/21% yoy, largely in line with GHe.Excluding the impact from a lower effective tax rate to 7.9% in 2015 (due toemployee stock option expense impact) vs 11% in 2014, operating profitincreased by 20% yoy, which was 6% lower than our expectations, withgross margin missing our estimate by 1.7pp. As each major segmentrevenue was largely in line, we attribute this miss to likely lower thanexpected gross margins in the fast-growing rail/new energy segment.Looking into 2016E: 1) for the new energy segment, we expect the newlogistics vehicle controller and charging pile products to contribute 6% of2016E total revenue and to provide a buffer against a temporary orderdelivery delay in 1Q16 due to escalating government overhaul on EVsubsidy programs; 2) for the rail segment which mainly provides tractionsystems for subway lines in cities, including Suzhou, we forecast a 7-12%revenue contribution in 2016E-18E after the subsidiary (Kingway) wasconsolidated since 2H15. However with a c.30% GPM from the segment, vsInovance’s previous blended GPM of c.50%, we expect slightly decliningmargins into 2018E. Overall, we now expect 21%/18% revenue/EPS CAGRin 2016E-2018E from 24%/21% previously. What to do with the stock We lower 2016/17/18E EPS by 7-12% to reflect declining gross profitmargin and the ongoing government’s EV subsidy overhaul. We cut our12-month 2017E EV/GCI-CROCI/WACC based TP by 5% to Rmb50.92.Maintain Buy. Key risks: Further shrinking margins caused by competitionor weaker-than-expect cost control; less favorable government support forthe NEV industry.
