Events:
The company released its quarterly report of 2014 on October 30. From January to September 2014, operating income reached 583 million yuan, down 19.06 percent from the same period last year. Net profit belonging to shareholders of listed companies was 62.62 million yuan, down 18.84 percent from the same period last year, diluted earnings per share was 0.19 yuan, and return on net assets was 3.85 percent, down 1.02 percentage points from the same period last year.
Comments:
1. Revenue fell in the third quarter due to the decline in orders
The company's main business revenue declined as orders decreased compared with the same period last year. Q3 achieved an operating income of 219 million yuan in a single quarter, a decrease of 36.57% over the same period last year, a net profit of 24.26 million yuan, a decrease of 37.90%, a net interest rate of 11.08%, a 5.57% decrease in sales expense rate and a 5.04% increase in management expense rate.
two。 Water conservancy construction has entered a golden period, and the market has a broad prospect.
The government has accelerated the construction of major water conservancy projects and gradually built major agricultural water conservation, major water diversion, key water sources, and backbone projects for the treatment of rivers and lakes that have been included in the plan this year and next year and during the 13th five-year Plan period. the total investment scale of the 172 major water conservancy projects such as the construction of large-scale irrigation districts is about 600 billion yuan. China will still maintain the peak of water conservancy construction in the next 7 years, and the demand for PCCP and other water pipe products is expected to achieve long-term and stable growth space and broad market prospects.
3. The company has strong regional control and can look forward to its medium-and long-term development.
The company has been producing PCCP pipes for nearly 40 years, with a complete range of products, excellent quality and a solid position in the industry. In addition, the company has strict cost control, and the gross profit margin has been maintained at more than 30%, which is in the leading level of listed PCCP enterprises. In recent years, the company is not satisfied to occupy the northwest market, aiming at investment opportunities to enter the central China market, with the continuous improvement of comprehensive strength, the company's medium-and long-term development can still be expected.
4. Actively develop gas pipes and participate in private banks
The company's concrete pipe revenue accounts for 78%, and plastic pipe revenue accounts for 22%. The company plans to gradually expand the proportion of plastic pipes in the future, and strive for the future plastic pipe revenue to reach 1 billion yuan / year (270 million yuan in 2013). At present, the company already has the ability to produce high-specification HDPE gas pipes (partially supplied in Yinchuan), and gas pipes are a focus of the future development of the company's plastic pipes; by the end of 1H2014, the company has raised a capital balance of 440 million yuan, cash on hand 260 million yuan, asset-liability ratio of 26%, with strong capital operation and magnifying leverage ability, the company will provide shareholders with higher returns through rational investment. In addition, the management of the company believes that the financial industry is the most promising industry in the future and is expected to participate in private banks. At present, the establishment of private banks is still in the preparatory stage of the project, and the follow-up development needs to be approved by Ningxia Financial Office and other competent departments at all levels.
5. Hand in hand with Zhenghe Island, the new growth company disclosed on July 30 that it had 3000 million shares in Beijing Zhenghedao Cooperative Enterprise (limited partnership) to set up a joint investment fund. The company operates steadily, in order to improve the comprehensive economic income of the company, we hope to test the operation of capital by investing less in industrial funds. In the future, we can choose excellent projects through Zhenghe Island platform and invest in high-growth and high-valuation industries by ourselves or in cooperation with other members, so as to inject new vitality into the development of enterprises. The company does not rule out the future development in other fields.
Profit forecast and investment advice.
The company is the leading enterprise in the PCCP management industry. Affected by the slowing down of water conservancy construction in the western region this year, the performance has declined, benefiting from the government's attention to water conservancy construction in the year after next and during the 13th five-year Plan period, and the performance will return to growth. The company holds hands with Zhenghe Island and Guangfa Medical Fund, actively looking for cross-industry development opportunities, the market capitalization of the company is small, the management has a strong will to manage the market capitalization, and the valuation has a large upward space. We estimate that the company's earnings per share in 2014-2016 will be 0.22,0.29,0.28 yuan. Give the company 2.46 times PB in 2015, with a target price of 11.00 yuan, and a "overweight" rating.
The main uncertain factors.
The price of raw materials fluctuates greatly, and the risk of project undertaking and bidding.