Event

On the evening of April 22nd, Nanling Minbao released its 2012 annual report, with annual operating income of 1.588 billion yuan, down 1.42% from the same period last year. Net profit belonging to shareholders of listed companies was 178 million yuan, down 19.56% from the same period last year, and earnings per share was 0.48 yuan. The dividend plan will distribute a cash dividend of 0.6 yuan (including tax) for every 10 shares.

Brief comment

The decrease in the sales of civil explosive products leads to a decline in income, and the blasting business needs to be improved urgently.

From the perspective of the company's income after the acquisition of Shenaxe, the production and sales of civilian explosive products is still the company's main source of income, accounting for 92.70% of the total revenue. In the past 12 years, the overall civil explosion industry was in the doldrums, and the company's sales of civil explosive products also declined. In the past 12 years, the sales of industrial explosives decreased by 16800 tons compared with the same period last year, the sales of industrial detonators decreased by 29.66 million, and the sales of industrial detonators decreased by 4.6734 million meters compared with the same period last year. It is the decline in sales of these civil explosive products that has led to a decline in the company's revenue. In addition, in terms of blasting business, although revenue has increased by 1312.50% year-on-year and developed rapidly, the proportion of revenue is still very small. With the extension of the company's civil explosion integrated service, the blasting business needs to be improved in the future.

The reduction in the price of raw materials is inferior to the rise in other costs, and the gross profit margin has declined across the board.

Although the price of ammonium nitrate, the main raw material, has been declining in the past 12 years, resulting in a reduction in direct material costs, the increase in personnel wages, fuel, power and manufacturing costs has pushed up production costs, resulting in a 1.49% to 39.66% drop in gross profit margin for civil explosive equipment products compared with the same period last year. In addition, the gross profit margin of engineering blasting and transportation and distribution has also declined to varying degrees.

With the completion of the reorganization with the god axe civil explosion, the regional advantage has been enhanced.

After the acquisition of Shenax Min Bang, the company's business scope has also been expanded, adding the production and sales of electric detonators, detonator detonators, detonators, detonator cords and other products, and the production capacity of industrial explosives has increased to 144000 tons. At present, the company has a full range of civil explosive equipment products, with more than 100 kinds, which is one of the enterprises with the most complete variety in the civil explosive industry in the country, and has formed ten production bases of civil explosive products with Hunan Yongzhou, Hengyang, Yueyang, Loudi, Shaoyang, Huaihua, Chenzhou and Qianjiang in Chongqing as the core. M & A will help to enhance the company's market competitiveness and enhance the company's profitability.

In 12 years, the net profit of Shenaxe Minbang was 140 million yuan, and the profit promise was fulfilled. In addition, it was promised that the cumulative net profit for 12-13 years would not be less than 244.8604 million yuan, and the cumulative net profit for 14 years would not be less than 369.4511 million yuan.

Key points of future performance: joint venture project production and blasting business growth

Hunan Nanling ao Ruikai Civil explosive Co., Ltd. (49%), which is owned by the company, introduces Orica's most advanced detonator production technology, and is expected to produce complete products by July 30, 13 years, which will contribute to the company's performance at that time. In addition, Nanling Civil blasting Engineering Company, established by the company, is a wholly-owned subsidiary of the company, which has not achieved the expected income at present. The company has general soil and rock blasting, B-class chamber blasting, A-class demolition blasting, special blasting, construction machinery leasing and blasting technical consulting service qualification. Blasting business first look at qualification, second look at blasting engineering talents, with the gradual improvement of the company's qualifications and regional advantages in Hunan and even the surrounding areas, there is a huge space for blasting engineering services in the future.

It is estimated that the 13-year EPS0.57 will increase the rating.

The company will still build a large-scale civil explosion group as a long-term development strategy, committed to the transformation from a production supplier to a system integration service provider to achieve integrated development. We are optimistic about the regional advantages of the company as the largest civil explosion enterprise in Hunan. Look at the development of the company's blasting business and the launch of new civil blasting products in the short term, and continue to pay attention to M & An integration in the long run. It is estimated that the EPS0.57, 0.66 and 0.76 yuan in 13-15 years will increase the holding rating.