Dahua Shares (002236): 2018Q4 stabilizes and waits for 2019 to improve gradually

Dahua Shares (002236): 2018Q4 stabilizes and waits for 2019 to improve gradually

Dahua’s Q4 revenue and profit growth have stabilized, and wait for the improvement of the business in 2019 to gradually realize Dahua’s release of the 2018 performance report, with a total operating income of 236 in 2018.

66 ppm, an increase of 25 in ten years.

58%; net profit attributable to mother is 25.

32 ppm, an increase of ten years6.

42%.

Q4 single-quarter revenue was 86.

35 ppm, an increase of 21 in ten years.

26%, net profit attributable to mother is 9.

68 ppm, a 10-year increase3.

63%.

The fourth quarter of 2018 stabilized on the basis of the third quarter, and the performance growth exceeded our expectations.

In 2019, we expect that the company will continue to promote refined management and improve the initial realization. EPS-2018 is expected.

85, 0.

99, 1.

25 yuan, maintain “Buy” rating.

The growth rate of Q4 profit is lower than the expected revenue growth rate. It is expected to be similar to the first three quarters. The gross profit rate will decrease. In 2018, Dahua’s overall revenue growth rate was faster than the net profit growth rate attributed to its mothers.It is estimated that overseas is the main cause as reported in the first half of 2018 financial report.

The change in overseas gross profit margin has not been matched by the progress of overseas demand and the speed of domestic technological progress. The scale of the ultra-low-end market has gradually expanded, and the ultra-low-end market has lowered the overall gross margin.

Secondly, the overseas market of domestic security vendors is mainly product-based, and the high-margin project-based market is in the process of continuous development. In the first half of 2018, some overseas companies countered in the market areas they had lost through trade wars, leading to increased competition and boots.Affect product prices and the overall gross profit margin of overseas markets.

At the same time, changes in the structure of domestic revenue (the growth rates of To G and To C are different) have brought some impact on domestic gross profit margin.

In 2018, internal refinement management was further advanced. It is expected that the operating performance in 2019 will be more obvious. Since the current president of the company, Mr. Li Ke, took office, Dahua has initiated internal management optimization.

Established the Central Research Institute to improve the efficiency of research and development; more detailed assessment at the sales end and more detailed assessment indicators; set up a financial department in the market, more detailed customer management; established a first-level delivery department in the supply chain to improve overseas delivery capabilities.

However, in 2018, due to the complex domestic and external macro environment, the industry’s prosperity has eased, overlapping research and development has expanded, and incentive costs have been allocated. The company’s refined management is not expected to be particularly obvious in the cost management control during the 2018 period (The comparison of Dahua Q3 and H1 financial reports is also reflected), but the macroeconomic expectations at home and abroad converted in 2019 will gradually stabilize, bringing about the possibility of repairing the market prosperity. It is expected that the refined management policy will be more obvious in 2019.
The heart of HOC city, “four full capabilities” to build a new smart city architecture Dahua’s “heart of city HOC” strategy, supported by the “four full” capabilities of full perception, full calculation, full intelligence, and full ecology, building industry-oriented, City-level, civil-level “1 platform, 2 centers, N-type applications (1 + 2 + N)” new smart city architecture.

“HOC City Heart” helps Dahua to provide personalized solutions for city-level, industry-level and civil-level users within the framework of new smart city construction standards and specifications, and to provide personalized design in addition to 杭州夜网论坛 kits and alternative services.

Wait for the macro and micro improvements to be gradually realized in 2019. Maintain the buy rating in 2018 as a turbulent year in overseas environments, but do not change the combination of domestic algorithms + dedicated chip software and hardware, and continue to promote the intelligentization of the security industry.

Taking into account changes in the overseas environment, we lower Dahua’s net profit attributable to mothers to 25 in 18-20 years.

32/29.

59/37.

5.3 billion (previous value was 27.

54/34.

56/42.

9.7 billion yuan), corresponding to EPS0.

85, 0.

99, 1.

25 yuan, with reference to the average valuation of comparable companies in 2019 at 21.

81 times PE, taking into account Dahua’s global industry division, given a certain estimated premium, 22-24 times PE estimates in 2019, target price 21.

78-23.

76 yuan, maintain “Buy” rating. Risk reminder: internal macro risks, the advancement of intelligent products is less than expected.