Summary of the report
Net profit surged 131 per cent to 140 million yuan in 2016. In 2016, the company's revenue reached 856 million, an increase of 10% over the same period last year, and a net profit of 140 million, a sharp increase of 131%. EPS was 10.37, an increase of 129%. The dividend per share is HK15 cents, with a dividend rate of 20%. The substantial increase in the company's net profit is mainly due to the improvement of operational efficiency and the substantial increase in revenue from power transmission and transformation business.
The sales and share of the company's power transmission and distribution business has increased significantly, becoming a source of profit. In 2016, the company's business had power transmission and distribution revenue of 550 million, an increase of 84% over the same period last year, accounting for 64% of the revenue. Rail transit revenue was 33 million, down 72% from the same period last year, accounting for 4% of the revenue. Industrial and other income was 270 million, down 25% from the same period last year, accounting for 32% of the income. The sales and share of the company's power transmission and distribution business has increased significantly, becoming a source of profit, with a gross profit margin of 44%, up 4 percentage points from last year. Rail transit, industrial and other businesses have declined to varying degrees.
Although the scale of the company is small, the products belong to high-end power electronics, the technology is world-class, and the products are monopolistic. In the UHVDC market, the company's core product is anode saturation reactor, which is the fourth and only manufacturer in China with independent technology in the world after ABB, Siemens and Areva. It is supplied to State Grid, Southern Power Grid, etc., with a market share of 100%. It is used in various large-scale projects, Belt and Road Initiative, etc., and three projects are expected to start in 2017. In addition, flexible DC transmission will become a new growth point of the company. Saijing's IGBT, IGBT drive and laminated bus are the core devices of all kinds of flexible DC equipment. Zhangjiakou project will be launched in the second half of 2017, which may bring substantial growth to the company's business income.
Pay attention to research and development, new products are gradually introduced to the market. In 2016, the company spent 34 million on research and development, accounting for 4 per cent of revenue. And the company has set up three major R & D centers, namely, Europe, Switzerland, Wuhan and microgrid technology R & D centers. The company is well prepared for developing new products, such as pulse power supply, power grid impedance measuring device, battery cycle measuring device and so on.
A small and beautiful company, 2017 is still a period of boom. We believe that the company is the leader of some high-end power electronic products, has core R & D capabilities, and will continue to benefit from the explosive growth of national UHVDC construction. The probability of winning large-scale projects is high, and the performance will maintain rapid growth in 2017.
The current share price is equivalent to 10.7 times PE in 2017, it is recommended to pay attention.
