Cobos (603486): Strategic contraction of foundry business steadily grows with independent brands

Cobos (603486): Strategic contraction of foundry business steadily grows with independent brands
Cobos has released its semi-annual report for 2019.In the first half of 2019, the company achieved operating income of 24.27 ppm, 10-year average3.8%, net profit attributable to mother 1.32 ‰, 36 in the previous decade.63%; of which the second quarter achieved operating income11.79 ppm, 10-year average of 10.16%, net profit attributable to mother 0.610,000 yuan, an average of 46 in ten years.85%.  In terms of business segments, the independent brand business grew steadily, and the foundry business was dragged down.In terms of self-owned brands, the revenue of “Kovos” sweeping robots increased by 11 per year.24% to 16.According to Zhongyikang, the retail share of Cobos ‘sweeping robots in the first half of the year increased by 8pc to 48%; the independent brand of clean small appliances“ Tianke ”grew rapidly in the United States and gradually entered offline channels.119.Half-year growth.48% to 0.9.6 billion yuan.In terms of foundry business, as the company concentrated its resources to expand its own brand business and strategically contracted the service robot ODM business, the first half of the year was 84.47% to 0.$ 3.9 billion in revenue from clean OEM / ODM business for small household appliances6.00 ppm, a ten-year average of 13.87%.  Accelerate the introduction of R & D and sales talents, and increase investment costs.Gross margin slightly increased by 0 per second.69pct to 37.28%; sales expense ratio increased by 1 in ten years.85 points to 18.08%, mainly due to the 北京夜生活网 company ‘s introduction of talents to expand its overseas business of independent brands and domestic brand cultivation of Timco, which resulted in a 39% increase in employees; the management expense ratio increased by 0.63pct to 6.32%; R & D expenses have increased significantly by 38%.86% to 1.25 ppm, mainly due to the company’s introduction of research and development talents led to an increase in staff budget and financial expense ratio.61pct to 0.30%; net interest rate 2.79 points to 5.42%.  Turnover of inventory and receivables slowed, and cash flow remained stable.Inventory turnover days increased by 44 days to 134 days, and receivables turnover days increased by 16 days to 60 days; cash flow conditions were stable, and the cash to revenue ratio of goods sold was increased by a maximum of 2.1pct to 121.7%, net cash flow from operating activities in the first half of the year was 48.18 million yuan (27.02 million yuan in the same period last year).  Expanding equity incentive plans boosted business confidence.The company also announced the annual stock incentive plan for 2019.The total number of incentive objects granted by this plan is 298, including senior and middle management personnel, technicians and other backbones. The total inventory to be awarded is 671.760,000 shares, accounting for 1.20%, of which the highest share granted for the first time accounts for 80% of the authorized share capital, and the increase in divided shares accounts for 20%.The grant price for stocks approved under this plan is 13.90 yuan / share.  Investment suggestion: The company’s strategic contraction of foundry business has put pressure on short-term revenue, but the healthy growth of the independent brand business and the expansion of its market share, we expect the company’s revenue in 2019-21 to be 57.05/63.87/72.1.3 billion yuan, net profit attributable to mother 4.48/5.67/7.30 trillion, the corresponding EPS is 0.80/1.01/1.30 yuan, the current expected corresponding 19-21 year earnings increase 32/25/20 times, maintaining the “Buy” rating.  Risk reminder: OEM business continues to grow, industry competition intensifies, and shareholder reductions lead to gradual change