matters

Revenue in 2014 was 254 million, down 12.7% from the previous year; operating profit was 70.1 million, down 7.29% from the previous year; Guimu's net profit was 59.69 million, down 8.74% from the previous year; due to the increase in overseas business, the comprehensive gross profit margin was 47.56%, down 4.73% from 2013; asset impairment affected the company's net profit of 8.74 million. At the same time, it was announced that 10 to 15 would be distributed 1 yuan (tax included); net profit returned to the mother in the first quarter was 3018 to 33.64 million; a year-on-year increase of 57% to 75%.

Key Views

1. The worst is over.

It has been announced that profits have remained basically flat in 2014. The withdrawal of Fortune Galaxy as an investor involved personnel adjustments, which had a partial impact on the domestic integrated circuit business. Our judgment is out of thin air. The forecast for the first quarter is net profit of 3018 to 33.64 million due to the contribution of overseas business profits; a year-on-year increase of 57% to 75%. With the exception of the photovoltaic project, which affected the delivery schedule due to the New Year, all other projects progressed smoothly — the loss reduction project completed 170,000 meters, an increase of 70% over the 100,000 meters at the end of 2013; the two distribution network projects were completed and entered the harvest period; the South African project started on January 15 and has now entered the pilot phase, once again proving that the company's overseas projects have reached the harvest period.

2. The first quarter of 2015 was a watershed in performance.

We have noticed that the profit forecast for the first quarter of 301.8 to 33.64 million is almost half of the profit for the full year of 2014. The company completed 170,000 watches in 14 years, and plans to complete all 450,000 watches in 15 years. Two distribution network projects also contributed to performance starting in 2015. Although the progress of the PV project has fallen short of expectations, the combined effect of profits after being connected to the grid will eventually be reflected. Contributions from municipal engineering in South Africa and electricity generation projects in Ghana are expected to be reflected in 16-17. The company's growth trend is clear.

3. The PPP model has received support from domestic and foreign governments, and China's Marshall and the Belt and Road Initiative has been implemented smoothly.

Currently, the company uses various PPP, BOT, and BT models overseas to participate in overseas project construction, which is in line with the country's current strategy for going out. Unlike other labor-intensive enterprises, companies do not simply export production capacity and labor, but rather export domestic low-cost capital and more advanced technology to hire local workers. This model can not only effectively help overseas countries get benefits in infrastructure construction and technological strength improvement, but also solve residents' employment through execution of projects. It is widely supported by overseas countries. China's Marshall and the Belt and Road Initiative are the purest target.

4. Profit forecasts.

EPS is predicted to be 2.56 and 4.11 yuan from 15 to 16, corresponding to PE20 and 13 times, high growth, replicability, strong demand, policy compliance, and maintaining a “strong push” rating! Risk warning.

Overseas business progressed less than expected; rapid business expansion led to a talent gap; risk of exchange rate fluctuations; risk of Ebola virus spread