Main points of the report
Event description
Lianyungang released its 2013 annual report that revenue fell 4.52 per cent year-on-year to 1.542 billion, gross profit margin fell 1.31 per cent year-on-year to 24.69 per cent, attributable to a 5.67 per cent year-on-year increase in net profit to 160 million, with an EPS of 0.20 yuan. Profit distribution plan: 0.5 yuan cash dividend (including tax) for every 10 shares. The company also released its quarterly report for 2014, with operating revenue down 5.87% year-on-year to 381 million, gross profit margin down 8.80% year-on-year to 21.19%, and net profit attributed to the parent company down 46.67% to 23.83 million year-on-year, achieving EPS of 0.02 yuan.
Event comment
The volume of coal handling declined and profit growth slowed in 2013. In 2013, the company's throughput and operating income fell 7.16% and 4.52% respectively compared with the same period last year, while net profit increased by 5.67%. The decline in throughput is due to a large decline in the company's coal handling volume, mainly due to: 1) insufficient demand in the domestic coal consumption market; 2) Chenjiagang waterway dredging in Xiangshui County, Jiangsu Province. Chenjiagang power plant coal is transported directly from Beifang Port; 3) the hinterland coal users purchase coal channels diversified, reducing the proportion of imported coal from Lianyungang. Although the company's gross profit decreased by about 39 million year-on-year due to the decline in coal throughput, the company's non-operating income due to investment income increased by about 32 million year-on-year, and the final attributable net profit increased by 5.67% year-on-year, down from 12.76% last year.
Nickel imports fell sharply, with profits falling by nearly 50% in the first quarter. We judge that the decline in revenue in the first quarter compared with the same period last year is mainly due to a 23.74 million reduction in stacking revenue as a result of Indonesia's policy of restricting nickel exports. China's nickel imports fell 8.4 per cent in the first quarter compared with the same period last year, while imports from Indonesia fell 11.73 per cent year-on-year, affecting the company's total throughput and revenue scale to some extent.
2014 the bottom of the performance, maintain the "cautious recommendation". Considering that: 1) due to the delay of demolition, the logistics yard and station project in the east of Xugou is expected to reach production by the end of 2014; 2) the hydraulic main body of berth 55-57 will be completed in June 2014, when the annual depreciation and financial expenses will increase by about 20 million, and it will take some time for the throughput to reach the target. 3) Nickel ore imports have shrunk significantly since the first quarter. If Indonesia still maintains the policy of restricting nickel ore exports, the company's annual throughput growth will be affected. 4) the company aims to achieve 1.7 billion revenue and 100 million net profit in 2014. We have lowered the diluted EPS forecast of the company from 2014 to 2015 to 0.10 yuan and 0.16 yuan, respectively. The year-on-year profit decline is mainly due to the postponement of the 2011 additional issuance project to reach production by the end of 2014, while the 2013 additional issuance project was also completed in mid-2014. We expect 2014 to be the bottom of the profit stage, while starting from next year, with the gradual increase in capacity utilization, storage revenue and throughput of the new project, we will enter a faster rising channel. Profits are expected to recover soon, maintaining the company's "cautious recommendation" rating.
