Event description

On July 4, 2016, Tianshun issued a semi-annual performance forecast for 2016, which is expected to achieve a net profit of 1360-14.9 million yuan, an increase of 5% and 15% over the same period last year.

Event comment

Government subsidies contributed to the steady growth of net profit. According to the performance forecast, Tianshun shares achieved a net profit of 1360-14.9 million yuan in the first half of 2016, an increase of 5 percent over the same period last year. Affected by the weak macro-economy and low demand for bulk goods, the company's main business income growth is relatively slow. The main reasons for the increase in the company's net profit in the first half of the year are: 1) the government subsidy in the first half of the year led to an increase in non-operating income compared with the same period last year; 2) the company's loans decreased compared with the same period last year and loan interest rates declined, resulting in a large year-on-year drop in financial expenses.

The "overweight" rating is given for the first time. Tianshun is the leader of comprehensive third-party logistics in Xinjiang, which is based on the logistics of bulk materials and large goods, and extends to supply chain management, logistics park operation and logistics financial supervision. The company's business model of combining heavy and heavy assets is becoming more and more mature and can be replicated; at the same time, the company's layout of an important economic hub in Xinjiang, with obvious geographical advantages, will fully benefit from Belt and Road Initiative's policy. It is estimated that the EPS of the company from 2016 to 2018 will be 0.53,0.57 and 0.68 yuan respectively, giving the "overweight" rating for the first time.

Risk hint: the demand for commodities remains sluggish, the risk of accounts receivable and the risk of default by outsourced parties