When it comes to fountainers, many people easily think of Foxconn, BYD and Lichun Precision. As an industrial Fulian born out of Foxconn Group, it is easy to be labeled as a “foundry” by the outside world.

2711P-T12C4A6 In fact, since the beginning of its establishment, Industrial rich Union has put its development direction on the industrial Internet and intelligent manufacturing. However, in the actual development process, the capital market seems to be not satisfied with the performance of industrial Fulian, so that its stock price has been falling after the listing.

Behind the slide in share prices, low gross margins are one of the biggest reasons. In sharp contrast to the low gross profit is its heavy investment in research and development, which can also see its enthusiasm for intelligent manufacturing.

Still not out of the “low gross profit” dilemma

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On October 30, Industrial Fulian (601138.SH) released its three quarterly reports for 2020. According to the financial report, in the first three quarters, Industrial Rich United achieved a total operating income of 282.576 billion yuan, an increase of 0.96%; Net profit attributable to shareholders of the parent company was 8.805 billion yuan, down 13.54% year-on-year. In the first three quarters of overall net profit, its net profit fell significantly. However, considering the impact of the special variable of the epidemic, this performance is not bad overall.

Looking at the third quarter earnings report of Industrial Fulian alone, it will be found that in the third quarter alone, Industrial Fulian’s revenue reached 105.922 billion yuan, an increase of 9.56% compared with the 2711P-T12C4A6 second quarter, and an increase of 32.31% compared with the first quarter.

The rapid recovery was mainly due to the effective control of the epidemic and the rapid recovery of the domestic economy. According to the data of the Bureau of Statistics, the total domestic GDP in the first three quarters achieved a positive growth of 0.7%, and the strong recovery of the domestic economy in the second and third quarters led to the recovery and development of related industries.

Overall, with the resumption of business growth in the first three quarters, Industrial Fulian’s net profit has also recovered significantly. According to the third quarter financial data show that the net profit attributable to the shareholders of the parent company of industrial Fulian reached 3.765 billion yuan, an increase of 18.64% in the second quarter and 101.56% in the first quarter, basically maintaining a steady development rhythm.

However, this quarter, Industrial rich Union still did not get rid of the “low gross profit” dilemma. According to financial data, from 2015 to 2019, its gross profit margin dropped from 10.50% to 8.38%. From the perspective of the net profit margin of the first three quarters of this release, the net profit of industrial Fulian in the first three quarters of this year fell by 0.31% and 0.51% compared with the net profit margin of the previous two years. Low gross profit has seriously dragged down the evaluation of the capital market, making its share price hover near the issue price for a long time.