Summary of the report:
Event: the company released the third quarter report: in the third quarter, the company's operating income was 87.06 million yuan, down 22.51% from the same period last year, and the net profit attributed to the parent company was 10.11 million yuan, down-1.86% from the same period last year. Operating income in the first three quarters of 2016 totaled 235 million yuan, down 32.75 percent from the same period last year, and the net profit attributed to the parent company was 25.42 million yuan, down 61.11 percent from the same period last year, corresponding to earnings per share of 0.09 yuan.
1. The large contract has not been settled yet, and the new product is still in the promotion period. The company's performance was low in the first three quarters of 2016, although it continued to decline in the third quarter, but the trend slowed down. The main reason for the sharp decline in performance is that some of the larger contracts undertaken by the company during the reporting period have a longer settlement cycle and revenue has not yet been reflected. In addition, the company's new products, low-temperature economizer, new air preheater project and new curtain wall products, self-cleaning enamel board, are all in the promotion period and have not yet formed a scale, with low operating income and gross profit margin.
two。 Strengthen the layout of "Great Environmental Protection Strategy" and promote the application of "new functional enamel materials". The main project of the company's fund-raising project "New functional Enamel material industrialization Base Construction Project" and "Enterprise Technology R & D Center Construction Project" has been completed, the trial production phase has begun, and mass production is expected to be achieved by the end of the year or early next year. Because of its excellent characteristics of "demand diversification" and "functional diversity", the new functional enamel material provides a strong guarantee for the company's independent innovation and marketing expansion. It is expected that the application of enamel materials will be expanded rapidly.
3. Expand the business field and optimize the industrial structure. At the same time of intensive cultivation of the original business, the company actively seeks a business breakthrough, acquires 51% of Jinkol Power equipment Co., Ltd., and makes use of Jinkol's advantages of cryogenic economizer and MGGH complete equipment in the field of ultra-low emissions to integrate other superior resources of the company and give full play to its synergy, so as to inject new impetus into the company's future development in the field of energy saving and environmental protection. In addition, the company has completed the employee stock ownership plan, with an average purchase price of 19.94 yuan, forming a certain margin of safety.
Investment suggestion: the company's earnings per share from 2016 to 2018 are expected to be 0.44,0.65 and 0.84 yuan respectively, corresponding to 49 times, 33 times and 26 times of PE respectively. Make the recommendation of "increasing holdings".
Risk tips: 1. The promotion of new products is not as expected. The order revenue was lower than expected.