Desai battery: performance growth exceeds expectations increase holding rating

Desai Battery (000049) announced the 2011 mid-year report. During the reporting period: the company realized operating income of 82.446 million yuan, an increase of 70.51%; operating profit of 73.355 million yuan, an increase of 86.65%; realized net profit attributable to shareholders of listed companies 40.008 million yuan, an increase of 76.15%, to achieve the basic Stock income 0.29 yuan.

Comments: The company's operating income increased slightly more than expected. During the reporting period, the company achieved an operating income of 82.446 million yuan, an increase of 70.51% year-on-year, and completed 54.96% of the 2011 annual operating plan of 1.5 billion. Among them, the main business battery and accessories achieved a revenue of 82337.91 million yuan, an increase of 71.06% year-on-year. The main business revenue growth was mainly due to the strong demand from downstream subsidiaries such as Huizhou Blue Micro, a subsidiary of Huizhou, strong demand for downstream businesses such as the iPhone, and the company’s focus on R&D investment, resulting in a significant increase in sales of small power management systems. The growth of the mobile power management system business in large-scale areas such as electric vehicles was lower than expected, due to the lower than expected market development of new energy vehicles and the failure of government investment as expected. At the end of 2009, the company had stripped its various loss-making businesses, and the related asset impairment losses and disposal losses were fully reflected in the 2009 financial statements. Since 2010, they have been market-oriented and have entered the development track. Lithium-ion batteries are the preferred power source for new energy vehicles. The mobile power management system will benefit from the explosive growth of new energy vehicles.

During the reporting period, the company’s comprehensive gross profit margin increased significantly, and it is expected that there will be room for growth in the second half of the year. In the first half of 2011, the company's consolidated gross margin was 21.95%, of which the main business battery and accessories gross margin was 21.86%, which was an increase of 5.13 percentage points from the same period of last year. The main reason for the increase in the gross profit margin of the main business was that the company achieved lean production management and improved its production efficiency. At the same time, multi-string power management products with higher gross profit margins were expected to grow.

The company’s expense rate during the period has increased significantly. In the first half of 2011, the company's period expense rate was 11.97%, which was a 2.83% increase from the same period of last year. The sales expense ratio and administrative expense ratio increased by 1.12 and 2.26 percentage points from the same period last year.

Sales costs have increased significantly. In the first half of 2011, the company's sales expenses were RMB 22.338 million, a substantial increase of 179.41% year-on-year, and the sales expense rate was 2.67%. Among them, the market development fee was 8.3329 million yuan, accounting for 37.82%, a substantial increase of 202.42% year-on-year; business hospitality expenses and wage expenses were 476.04 and 2.6226 million yuan, respectively, an increase of 236.28% and 43.73% over the same period last year, the administrative expenses increased substantially. During the reporting period, the company’s management fee was 72.8303 million yuan, a substantial increase of 126.25% year-on-year, and the management expense ratio was 8.83%, 2.26 percentage points higher than the same period. Among them, the research and development fee was 395,444,000 yuan, accounting for 54.32%, an increase of 125.98%; wages and office expenses were 985.26 and 595.14 million, respectively, an increase of 130.97% and 167.34%, respectively, and wage growth was a substantial increase in R & D personnel To.

The rate of financial expenses declined. The company's financial expenses for the current period was RMB 3,825,700, which was RMB 910,400 less than that of the same period of last year, which was a decrease of 19.22%. The financial expense ratio was 0.46%, which was a decrease of 0.55 percentage points compared with the same period, mainly due to the exchange gain of RMB 1.0812 million during the reporting period. In the reporting period, the company’s asset-liability ratio was 64.70%, which was a decrease of 4.67 percentage points from the same period of last year.

Did not look at the industry status and BMS field. The company has a certain industry position in the mobile power market segment, among which the small mobile power protection circuit board sector ranks first in the country, with a production capacity of 250 million units, and gradually expands to multiple parallel power management products, and the gross profit margin is expected to increase further; It is the company's leading edge in power management systems (BMS) in the field of electric vehicles and energy storage power stations. The products have been widely used in new energy vehicles such as the Beijing Olympics and Shanghai World Expo, and are expected to benefit from the explosive growth of new energy vehicles.

First give "overweight" investment rating. Considering the company’s industry position in the mobile power market segment and potential growth in the new energy vehicle market, it is expected that the company’s earnings per share in 2011 and 2012 will be 0.65 yuan and 0.88 yuan respectively, which will be calculated based on the closing price of 21.71 yuan on August 8. The corresponding PEs were 33.45 times and 24.80 times, respectively, giving the company an "overweight" investment rating for the first time.

Risk Warning: Economic Fluctuation Risk; Market System Risk; Progress of New Energy Vehicles is Lower than Expected.