Dahua Shares (002236) 2019 Interim Report Performance Review: “Repair Internal Strength” Realizes Significant Performance

Core point of view H1 company’s revenue in 2019 is 108.

07 billion, ten years +10.

11%, achieving net profit of return to mother 12.

39 trillion, ten years +14.

51%, short-term overseas gross margin + 9pcts is the biggest highlight of the interim report.

In addition, Q2 achieved revenue of 64.

59 trillion, ten years +4.

23%, net profit attributable to mother 9.

23 ppm, +17 a year.

31%, showing a seasonal improvement trend.

We have long been optimistic that the intelligentization of the video security field will lead to heavy industrial upgrades, and we will pay attention to the improvement of the company’s profitability and the acceleration of overseas market expansion brought by the new reforms, and maintain a “Buy” rating.

   Internal reforms have boosted profitability, and it is expected that the expected performance growth rate will exceed 25%.

The company achieved revenue of 108 in the first half of 2019.

07 billion, ten years +10.

11%, achieving net profit of return to mother 12.

39 trillion, ten years +14.

51%; net profit after returning to the mother 11.

380,000 yuan, +2 for ten years.


The company maintained steady growth against the backdrop of turbulence in the external environment, and its profit end was better than its revenue end due to improvement in gross profit margin + profit concessions.

On the cost side, benefiting from reform of overseas channels + optimization of product structure, the company’s gross profit margin decreased by +3.

85% to 40.

4%; expense, sales / management / R & D / financial expense ratios are +1.




3pcts is mainly due to the company’s commitment to expand market share and perfect sales channels, and continue to invest expenses, including the distribution of incentive costs of nearly 100 million (estimated 200 million), and exchange losses reduced by +0.

300 million.

Also the interest rate is -1.

3 pieces to 11.

9%, stemming from the tax shield effect of preferential policies such as the addition of research and development costs.

In a single quarter, the company achieved revenue of 64 in 2019Q2.

59 trillion, ten years +4.

23%, net profit attributable to mother 9.

23 ppm, +17 a year.

31%. The growth rate of revenue is partly due to the high base of revenue caused by the company’s non-strategic contraction in the same period last year. The growth rate of net profit is much better than the revenue side.


Looking forward, the company expects the growth rate of the third quarter of 2019 to fall at 10?25%, corresponding to a net profit of 17.

500 million, according to this calculation, the Q3 performance center is 24.

2%. After the company reform continues to advance, we are optimistic that the company’s performance will improve quarter by quarter. Is it expected that the growth rate of growth will reach 25%?

   Revenue at home and abroad remained stable, and the growth rate of overseas gross profit margin +9 pcts demonstrated the company’s “repair internal strength”.

In terms of products, the company’s H1 achieved solution revenue of 56.

300 million, previously +12.

1%, gross margin constant +2.

1 to 44.

1%; realized product revenue of 45.

400 million, previously +11.

9%, gross margin constant +4.

4 pieces to 40.

2%, gross margin improvement mainly comes from the product side.

In terms of different regions, under the influence of macro factors, the company’s internal revenue growth indicators have maintained steady growth, of which: 1) Domestic: B-end volume + G-end recovery, H2 is expected to be better than H1.

The company’s domestic revenue in 2019H1 is +11 for ten years.

2% to 70.

9 ‰, gross margin +1 per second.

03 pieces to 37.

47% (decreased benefit 北京夜网 tax rate).

Looking forward to the future, B-side demand is transformed into corporate efficiency improvement, driving a single project ASP to significantly increase, and according to the bidding tracking data, government demand is presented to improve, and we noticed that the company won the bid for Q2 2019 in Jinhua City (6 billion), Nanjing GaochunDistrict (1.

500 million) and other large security projects, considering the initial characteristics of costs, we are optimistic about the company’s overall performance in the second half of the year.

2) Overseas: Management reform is expected to improve, and gross profit margin will improve significantly.

The company’s 2019H1 overseas revenue is +8 for ten years.

1% to 37.

Under the influence of non-market factors, the growth rate of overseas revenue was slightly 佛山桑拿网 lower than that of domestic, but the gross profit margin decreased by +9 due to the optimization of product structure and enhanced channel management.

26% to 45.

92% improvement, showing the effectiveness of the company’s internal reforms.

Looking ahead to H2, there is still uncertainty in overseas markets, but emerging market demand is constantly being released. It is expected that revenue will maintain a steady growth rate, and the biggest concern is still the continuous improvement in gross profit margin.

   External pressure and the improvement of profit quality are another highlight of the company’s internal management reform.

The company’s inventory turnover days in 2019H1 have been flat for many years, and the number of days of accounts receivable +25.

2 days to 177.

6 days, including long-term accounts receivable for ten years +9.

7 trillion, accounting for +2 of the total assets for ten years.

1% to 9.

6%, mainly because the installment collection project (that is, the government project) passed the acceptance, and affected by the government’s tax and fee reduction policies, the company’s repayment cycle was lengthened.

  Revised, the company’s financial department revised the IFS system to implement refined management, and at the same time, the bargaining power of the upstream supply chain was enhanced, and the account turnover days should be +19 each.
In 9 days, it helped improve the overall operating cash flow.

The ratio of net cash flow / net profit of the company’s operating activities in the first half of the year +0 for half a year.

28 to -0.

72, of which Q2 was +0 ten years ago.
71 to 0.

95, another 42 trillion in cash in hand (only 24 trillion in the same period last year).

   The three major projects of convertible bonds will be advanced ahead of time, and the company’s long-term layout is optimistic.

The company announced plans to issue four major projects, namely Hangzhou Intelligent Manufacturing Base, the R & D and Industrialization of Smart IoT Solutions, Xi’an R & D Center, and supplementary working capital.Sufficient production capacity, 2) the smart IoT project serves the HOC strategy and enhances the company’s competitiveness in the visual IoT era, 3) the Xi’an R & D Center project uses the rich talent resources of the Midwest to promote the company’s R & D investment ratio.
Prior to the successful issuance of convertible bonds, the company advanced the construction of three major projects in advance through self-raised funds, and the H1 construction progress was 13% / 8% / 3%, respectively.

Against the background of the macro-environment pressure, the company has gradually pushed forward internal management reforms to improve profitability, and continues to strive for long-term development. We continue to be optimistic about the company’s future development prospects.

   Risk factors: Government demand is lower than expected; AI exceeds expectations ahead of time; exchange rate change risks; internal reforms of the company are lower than expected, overseas market development is blocked, and supply of key components is blocked.

   Investment suggestion: The new leader reform will bring about improvement of the company’s profitability and acceleration of overseas market expansion.

We maintain the company’s EPS forecast for 2019-2021.



73 yuan, giving a 20x PE estimate for 2019, corresponding to a target price of 21.

60 yuan, maintain “Buy” rating.