Event: the company issued annual report: in 2014, the company achieved operating income of 405 million yuan, down 8.47% from the same period last year, and realized net profit of 18.1784 million yuan, down 66.99% from the same period last year. The performance is in line with our expectations.
Main points of investment:
Due to the decline in performance due to the downturn of independent brands, the active development of new customers will help the main industry recover.
1) the main reasons for the sharp decline in the company's net profit and the 2.76% year-on-year drop in gross profit: first, the company mainly supports its own brands, which led to a 12.68% drop in crankshaft sales last year due to the downturn of its own brands; second, the debt restructuring profit of 26.8 million yuan in 2013 led to a high base of non-operating income. 2) in the fourth quarter, the company achieved an operating income of 114 million yuan, an increase of 18.83% over the previous quarter, and a net profit of about 5.56 million yuan, an increase of 46.82% over the previous quarter, which is in line with the law of the peak season of the automobile industry. We believe that the increase in non-operating income was mainly caused by Echai Hongxiang's debt of 9.33 million yuan in the fourth quarter. 2) at present, the plant construction of the "crankshaft production line" project invested by Pengxiang, a major shareholder, has been completed, and the equipment has been installed and debugged. According to the promise of the major shareholder Haowu Mechatronics, we expect that this year's "crankshaft production line" into listed companies, Jinhong crankshaft production line to complete the renewal and relocation is a high probability event. As the company actively develops new customers (successful development of Guangzhou Automobile, etc.), adjusts product structure and puts into production new production lines with high automation rate (Jinhong crankshaft invests 140 million yuan to add two new production line layout, middle and high-end), the company's business performance is expected to continue to improve.
The catalyst of stock price remains unchanged
1) the major shareholder Haowu has excellent qualification of mechanical and electrical assets. In addition to benefiting from the development and growth of the property Group, the controlling shareholder, the company may become the capital platform for the securitization of the automotive electromechanical plate of the property group. 2) the company and three PE companies in Tianjin have initiated the establishment of a technology-based SME venture capital fund-Tianjin Fortune Jiaji Investment Partnership (limited partnership), which will be introduced into the Ministry of Science and Technology guidance Fund, which will mainly invest in advanced manufacturing, electronic information, new materials, high-tech services and other emerging industries in the future. In terms of policy, the CSRC intends to cancel the administrative examination and approval of major asset restructuring in addition to backdoor listing, as well as the addition of M & A funds and other M & A payment and financing instruments for listed companies. This will provide convenience and policy guarantee for the company to smoothly carry out capital operation to improve the company's business structure and enhance the company's profitability. 3) the actions of Xinjiang Silicon Valley Paradise continued: Xinjiang Silicon Valley Heaven bought 18.33 million shares of the company from the secondary market on June 25, and signed a three-year "Strategic Consulting and M & An Integration Service Agreement" with Silicon Valley Paradise Group on December 11. On December 24th, the second shareholder, Xinjiang Silicon Valley Heaven, increased its stake in the company by 4.2563 million shares, accounting for more than 5% of the company's cumulative shareholding, and became a related party, which is conducive to closer cooperation between the company and Xinjiang Silicon Valley Paradise in the future. We believe that with the support of Silicon Valley Paradise, which has experienced in industrial integration, M & An and strategic consulting, the company will carry out M & An integration and expansion at home and abroad in the future to achieve great-leap-forward development and improve the company's management level. it is worth looking forward to achieving rapid growth in performance.
Profit forecast
We insist on the previous judgment: the gradual stabilization and improvement of the company's main crankshaft business is a high probability event. At the same time, the revision of executive compensation system linked to ROE and market capitalization shows that the company attaches importance to market-oriented management, improve company performance and enhance investor confidence. As a result, the company's performance is expected to stabilize and pick up this year and achieve rapid growth.
We estimate that in 2015-17, the company will achieve operating income of 4.15 pound 4.88 / 609 million yuan, a year-on-year increase of 1.96x18max 25%, and a return net profit of 0.21cm 0.26 / 33 million yuan, a year-on-year increase of 16.31 pm 21.65max 26.52%, corresponding to an EPS of 0.05max 0.06max 0.07 yuan per share. It is recommended to maintain the "overweight" rating.
Risk hint: mass production of new products and new market development are lower than expected; cost growth during the period is higher than expected.
