The company released its annual report for 2015. During the reporting period, the company achieved operating income of 291 million yuan, down 5.23% from the same period last year; net profit attributed to the parent company was 36.8865 million yuan, down 24.23% from the same period last year; and earnings per share was 0.45 yuan per share, down 33.33% from the same period last year.
The continued downturn in demand has led to a decline in performance, and the performance of the industry is expected to improve after recovery. The decline in revenue in 2015 is mainly due to the weak growth of daily porcelain revenue and the sharp decline in sales of fine porcelain; at the same time, the revenue of ceramic wine bottles is also affected to a certain extent due to the contraction of downstream demand and the decrease of orders. But on the whole, under the background of the slow global economic recovery and the overall weakness of China's ceramic industry, the decline in daily porcelain income of the company's main products is not prominent. In the future, with the gradual recovery of the external economy, the industry situation is expected to improve. The sharp decline in profits is mainly due to the fact that the company has stepped up its own brand marketing and channel construction, so that the rate of sales expenses has increased from 4.5% to 5.7%, and the rate of management expenses has increased from 8.7% to 11%. We believe that with the increase of the influence of independent brands in the future, the related expense rate is expected to gradually reduce.
Independent brand construction has gradually landed, and the domestic sales business is expected to continue to expand. In recent years, due to the continuous slump of overseas contract manufacturing demand, the company has gradually strengthened the domestic market development and independent brand construction to enhance the anti-risk ability. During the reporting period, the company focused on improving product quality and enriching product lines, while actively expanding e-commerce and other new channels to enhance product penetration; in December 2015, the company participated in early technology to enter the field of social e-commerce operation. Thanks to all efforts, the company's domestic sales revenue in 2015 was 104 million yuan, an increase of 46 percent over the same period, and domestic revenue accounted for 36 percent of the total revenue, up 13 percentage points from last year. We believe that with the continuous construction of brands and channels and the gradual completion of the ceramic offline experience hall, the company's domestic sales business is expected to become a profit-driven point in the future, driving the continuous growth of sales revenue of daily porcelain.
Actively embrace "Internet +" and cultivate new driving forces for performance growth. It is mentioned in the company's development strategy that the company will not only deepen the main business and further consolidate and improve the brand market share, but also actively open up new business areas, try to form new profit growth points, and provide shareholders with better investment returns. The company's "Songfa win Fund", set up with its own capital of 800 million yuan, is committed to equity mergers and acquisitions in emerging industries such as "Internet +". As the company continues to accumulate experience in industrial investment, the potential excellent investment target is expected to become a new driving force for performance growth.
Profit forecast: without considering the extension expectation, we expect the EPS of the company from 2016 to 2018 to be 0.60,0.73,0.83 yuan per share respectively; corresponding to the current share price PE value of 63X, 52X, 46X respectively, maintaining the "buy" rating.
Risk tips: independent brand promotion is not up to expectations; the economy continues to decline below expectations.
