Phillip Securities Group
Please note that the Day Light Saving of Europe and US will be effective on April 1st and March 11th respectively. The trading hours for those relevant contracts will be 1 hour earlier. Any questions, please contact us at 22776677.For details, please visit our foreign futures website or contact us at 22776677.Moreover,the spread of USD/JPY is low as one pip.Please click here for details
 
  Phillip Investor Notes

14-03-2024(Thu) 13-03-2024(Wed) 12-03-2024(Tue) 11-03-2024(Mon) 08-03-2024(Fri)
Page : 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 |
Investor Notes - Phillip Securities (HK) Ltd
Past Investor Notes  
Phillip Home Send to Friends Free Subscription Give Comments ¤¤¤åª©
16 Jan, 2020 (Thursday)



VIRSCEND EDU(1565)
Analysis¡G
Virscend Education is the largest K12 private education service provider from preschool to grade 12 in southwest China. It has operated private schools for more than 19 years. Up to now, Virscend Education has established and operated a total of 16 K12 schools and 2 universities under it, with a total of about 45,580 students. In the college entrance examinations held in 2017, 2018 and 2019, about 94.6%, 94.7% and 95.1% of the high school graduates who participated in the examination obtained the scores that they can apply for and progress to top universities in China.
Strategy¡G
Buy-in Price: $1.85, Target Price: $2.30, Cut Loss Price: $1.60



CAERI (601965.CH) - High added-value business stepped into growing stage after the new capacity was put into operation

Investment Summary

Q4 soared, making 15 percent added to the whole year's result. Recently CAERI released the 2019 preliminary result report. In 2019, the company achieved an annual revenue of RMB2,754 million, representing a slight yoy drop of 0.14%. Net profit attributable to the listed company shareholders was RMB465.7 million, a yoy increase of 15.49%. EPS was RMB0.48. Net profit attributable to the listed company shareholders after deduction of non-recurring losses and gains was RMB430 million, a yoy increase of 15.16%.

The net profit of the first three quarters was RMB94.4/95/97.4 million, a yoy increase of 8.43%/9.77%/15.9%, respectively, maintaining a steady growth with the expanding ratio. In the fourth quarter, the net profit increased dramatically by 23% yoy to RMB179 million.

The business structure was turning better, and the gross margin went up substantially. The company's revenue by quarter was low at first and went up later. The first two quarters saw the revenue of RMB501 million/RMB582 million, down 22% and 28% yoy, respectively. The third and fourth quarters saw the revenue of RMB606 million/RMB1,070 million, which increased by 8.7% and 42% yoy. The reasons behind this are as follows:

1) In 2019 H1, the engineering vehicle market encountered downturn and the company's business of special vehicle manufacturing declined sharply yoy.

2) However, since the third quarter when the domestic heavy truck market recovered, the special vehicle business had regained some stability.

3) Meanwhile, the testing cycle of models subject to the National VI standard was lengthened, and the checking time for the revenue of automotive technical services was correspondingly lengthened.

4) The company held sufficient test orders for models subject to the National VI standard, which would be delivered faster in H2.

In terms of the business structure, the company's automotive technical service has grown rapidly, with the highest gross margin and the best profitability, leading to a significant increase in the company's overall gross margin. The company's gross margin recorded in the past four quarters were 30.2%, 28.4%, 29.8%, 31.2%, respectively; with a yoy increase of 6/11.1/2.6/-4.4 ppts, respectively. The overall gross margin of the year increased by 4.2 ppts to 30.1%.

Good cost control: the company improved management and took a series of measures to cut cost and increase efficiency, so the condition of cost control was good. Sales expenses for the first two quarters fell 0.9% and 9.8% yoy, respectively. In the last two quarters of rapid growth, sales expense increased by only 1.6% and 9.3% yoy, respectively. The overall ratio of the sales expense of the year had basically no change yoy. Administration expenses increased, with the annual ratio of administration + R&D increasing by 2.1 ppts to 10.2%. Based on our assessment, it was mainly due to increased expenses on operation and depreciation after new capacity was put into operation.

New capacity was put into operation and high added-value business stepped into growing stage: in the perspective of the downward pressure on domestic economy, the slowdown development and competition in existing market of automotive industry, and the rapid development of new energy vehicle market, the factory launched new intelligent connected models which are more competitive. This will lead the rapid growth of China's automotive technology service industry, and the company's high added-value business was expected to usher in rapid growth. The new capacity built in 2019 included a new automobile wind tunnel laboratory and an intelligent connected model test base. In the future, it also plans to build the first hydrogen power quality control centre in China and a R&D test base for "new energy and intelligent connected models" in the Yangtze River Economic Belt, to further improve its strategic layout and resource integration.

Investment Thesis

In the fourth quarter, CAERI introduced equity incentive plan again, which bound the interests of core employees to those of the company, stimulated the enthusiasm of the employees, and contributed to the achievement of long-term stable growth target. Considering the high monopoly barrier of the counter-cyclical automotive technology service business of the company, as well as the turning point of result brought by the operation of the new capacity, we give target price of RMB 9.8 yuan, respectively 20.4/17.3/15.4x P/E of our expected EPS for 2019/2020/2021and an "Accumulate" rating. (Closing price as at 13 Jan)

Financials

Click Here for PDF format...




Recommendation on 16-1-2020
RecommendationAccumulate
Price on Recommendation Date$ 8.440
Suggested purchase priceN/A
Target Price$ 9.800
Writer Info
Zhang Jing
(Research Analyst)
Tel: (+86 21 51699400-103)
Email:
zhangjing@phillip.com.cn

Local Index
       Index    Change   Change%

World Index
       Index    Change   Change%
  

A-H spread
Stock Code H share
Price
A share
Price
H share
discount


Oversea Research Reports


Investment Service Centre



Enquiry : 2277 6666 OR investornotes@phillip.com.hk
If you cannot read this e-mail in the proper format, please click here to view the web version.

Information contained herein is based on sources that Phillip Securities (Hong Kong) Limited and/or its affiliates ( the ¡§Group¡¨) believe to be accurate. The Group does not bear responsibility for any loss occasioned by reliance placed upon the contents hereof. The Group (or its employees) may have interests in relevant investment products. For details of different products¡¦ risks, please view the Risk Disclosures Statement on http://www.phillip.com.hk.

If you DO NOT wish to receive further marketing emails from us, please click HERE to opt-out.

ª©Åv©Ò¦³¡A ½¦L¥²¨s¡C

Copyright(C) 2020 Phillip Securities (HK) Ltd. All Rights Reserved.


Copyright © 2011 Phillip Securities Group. All Rights Reserved [ Risk Disclosures Statement ] [ Terms and Conditions ] [ Personal Data Policy ]