Events:
On October 26, 2016, the company released its third-quarter report: in the first three quarters, the company achieved operating income of 271 million yuan, an increase of 0.05% over the same period last year, and the net profit belonging to shareholders of listed companies was 13.36 million yuan, an increase of 16.43% over the same period last year. Among them, the company realized operating income of 93.95 million yuan in the third quarter, an increase of 6.80% over the same period last year, and the net profit belonging to shareholders of listed companies was 3.05 million yuan, down 10.55% from the same period last year.
Main points of investment:
The profits of downstream steel enterprises have improved, and the company's main business may stabilize. The company is the leader of metallurgical couplings in China, and its main products are universal couplings, drum tooth couplings and precision reels, accounting for 40.24%, 27.63% and 13.63% of business income, respectively. In the first half of this year, due to the stimulus of a steady economic rebound and the self-repair of the previous steel price decline, some steel companies turned losses into profits, and the company's main business rebounded slightly. As the central government accelerates supply-side structural reform and "three cuts, one decline and one supplement", the steel industry is expected to balance production and sales at a lower level, and the company's performance is expected to increase slightly year-on-year for the whole year.
Firm strategic transformation, layout of intelligent manufacturing. In 2014, the company proposed to comprehensively deepen the reform, with the mission of "driving the world and building the future", and actively lay out the field of intelligent manufacturing through endogenous growth and epitaxial mergers and acquisitions. In August 2015, the company participated in the establishment of the Aerospace Zijin military-civilian Integration Industry Investment Fund, established an intelligent industrial park in November of the same year, and introduced Ruicong robots and other projects into the park. In addition, Tai Zhengbiao, the actual controller of the company, became the controlling shareholder of Nanjing Institute of increasing Materials by setting up an investment company, with a registered capital of 100 million yuan, academician Lu Bingheng, a leading figure in 3D printing, and more than 80 full-time R & D personnel. Through the cooperation of academicians, the company is expected to create one of the strongest R & D bases of 3D printing in China.
The merger and acquisition of Longyu Electronics is terminated, but the smart manufacturing layout continues. In May this year, the company planned to buy 100% of Longyu Electronics through cash purchase and share issue. however, due to the influence of market environment, the two sides could not agree on valuation adjustment, and the company decided to terminate the merger in September this year. We believe that the termination of M & A does not affect the overall expectation of the development of the company's smart manufacturing business, and the relevant layout continues. On October 24, the company's securities were changed from "Tyre heavy Industry" to "Tyre shares", demonstrating the company's determination to diversify its business development. At the International Industrial Expo held in November, the company demonstrated its VR racing simulator, food packaging production line, 3D printer and other products. We believe that the company's intelligent manufacturing product research and development has made an initial breakthrough, the future will become a new performance growth point.
For the first time, the coverage gives the company a "neutral" rating: the company has formed three major industrial layouts of "metallurgical equipment, intelligent industry, and technology investment". It is estimated that the company's net profit from 2016 to 2018 is 14,23,38 million yuan respectively, and the corresponding EPS is 0.03,0.05,0.08 yuan per share, respectively. According to the November 23rd stock price of 10.50 yuan, the corresponding PE is 334,2011,124 times respectively. We believe that the company is determined to transform its smart manufacturing industry, giving the company a "neutral" rating for the first time.
Risk hint: the metallurgical linkage industry continues to decline; the company's intelligent manufacturing business expansion is not as expected; the company's new product performance is not as expected.