Sanhua (002050 CH) Scored New Orders, With Production Expansion March 9, 2021 215

PSR Recommendation: ACCUMULATE Status: Maintained
Target Price: CNYCNY26.70

Investment Summary
Gross Profit Margin Rose QoQ
According to the (unaudited) report for Q3 2020 disclosed by the Company, in the first three
quarters, Sanhua recorded a revenue of RMB8,593 million, down 0.32% yoy, and a net profit
attributable to shareholders of the listed company of RMB1,092 million, up 3.4% yoy.
Specifically, the Company in Q3 reported a revenue of RMB3,275 million, up 17.40% yoy,
and a net profit attributable to shareholders of the listed company of RMB449 million, up
23.51% yoy. The gross profit margin in the first three quarters was 28.69%, which was
basically the same yoy. In Q3, the gross profit margin was 30.14%, a slight increase of 0.5
ppts yoy, and an increase of 1.14 ppts qoq. In Q3, the revenue of the Company’s electric
refrigeration and air conditioning parts business and auto parts business was approximately
RMB2.63 billion and RMB650 million, respectively, an approximate increase of 10% and 50%
yoy. The Company’s outperformance in downstream sales volume and the improvement in
product mix played a positive role in the recovery of profitability. The Company had good
control on expenses. In the first three quarters, the period expense ratio was 15.09%, up
1.45 ppts yoy. Specifically, the financial expense ratio was 0.47%, up 0.83 ppts yoy, which
was mainly affected by exchange gains and losses. The Company’s net profit margin in Q3
reached 13.70%, up 0.68 ppts yoy.

About the author

Profile photo of Zhang Jing

Zhang Jing
Phillip Securities (HK)

Bachelor Degree in Tongji University of Engineering; Master Degree in East China Normal University of finance. Currently covering the automobile and air sectors. She has years of experience in investment research and is good at combining analysis for the companies with industry prospects.

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