Event: the company announced the third quarter report of 2016.
Gross profit margin rose slightly and debt ratio fell slightly. As of the first three quarters, the company's gross profit margin was 28.75%, up 4.06% from the same period last year, and the net profit rate was 10.00%, up 1.42% from the same period last year. The company's asset-liability ratio was 66.11%, down 3.22% from the same period last year; interest-bearing debt ratio was 36.32%, down 16.63% from the same period last year; excluding accounts received in advance, the asset-liability ratio was 33.07%, down 12.54% from the same period last year; and the net asset-liability ratio was-80.74%.
Revenue and net profit grew steadily. In the first three quarters, the company achieved an operating income of 2.804 billion yuan, an increase of 1.76% over the same period last year, an operating profit of 390 million yuan, an increase of 17.35% over the same period last year, and a net profit of 280 million yuan belonging to the owner of the parent company, an increase of 18.82% over the same period last year. In terms of the three expenses, as of the first three quarters, the company's sales expenses were 55.01 million yuan, down 14.42% from the same period last year; management expenses were 36.08 million yuan, up 10.15% from the same period last year; and financial expenses were 21.25 million yuan, up 75.37% from the same period last year.
Five-year bonds were successfully issued with a coupon of 1.2 billion. On September 9, 2016, the company issued an announcement on the issuance of corporate bonds to qualified investors in 2016. The size of the bond issue is no more than 1.2 billion yuan, the basic issue size is 500 million yuan, the over-allotment can be no more than 700 million yuan (including 700 million yuan), and the issue term is five years. The issuer's long-term main credit rating is AA, and the current bond credit rating is AA. As of September 14, 2016, corporate bonds have been issued with an actual issuance size of 1.2 billion yuan, with a final coupon of 4.70%.
Investment advice: the company's previous non-public offering was successfully completed and Zhejiang Hangmin subscribed at a premium, demonstrating its confidence in the future development of the company. The company is also actively expanding overseas projects. At present, two projects in the United States have been launched. In addition, if the company actively participates in the construction of Ju Neng City, a major shareholder, and creates an innovative and intelligent city, it is expected to cut into the new energy automobile industry. We estimate that the company's EPS in 2016 and 2017 will be 0.23 yuan and 0.33 yuan respectively. According to the company's stock price of 5.53 yuan on October 26, it corresponds to 24.04 times and 16.76 times of PE in 2016 and 2017, giving the company a price-to-earnings ratio of 30 times in 2016 and a corresponding share price of 6.90 yuan, maintaining the company's "overweight" rating.
Risk Tip: fundamental downside risk.