Incidents:
On February 20, 2017, the company released a performance report. In 2016, it achieved revenue of 367 million yuan, a year-on-year decrease of 2.39%, and net profit of 9.81 million yuan, a year-on-year decrease of 15.48%.
Furthermore, the company issued an announcement that since it carefully judged that the number of non-public shares involved in the company's current offering did not meet the requirements of the new refinancing regulations “the number of shares to be issued must not exceed 20% of the total share capital before this issue,” the company decided to terminate the important matters planned and resume trading.
Conclusions:
1. Performance has declined slightly, and the main business is expected to improve this year.
The company is a leading enterprise in the metallurgical shaft coupling industry segment. Its main products include steel rolling equipment parts such as universal shaft couplings, drum-toothed shafts, shear blades, etc., as well as precision coils, composite skateboards, and automobile transmission shafts. With the exception of automobile drive shafts, all other product applications are in the steel industry. The main customers include large enterprises such as China Yizhong, Shougang, Angang Steel, Baogang, and Ji Steel. In 2015, the company's revenue from universal shaft couplings, drum-toothed shafts and precision reels accounted for 40.24%, 27.63%, and 13.63% respectively.
Corporate receivables have risen sharply in recent years. As of the third quarter of 2016, corporate receivables reached 547 million yuan. Benefiting from the improved profit situation of steel companies in 2016, we expect the company's receivables repayment to improve drastically this year. At the same time, strong demand for steel will drive equipment renewal and investment, which is also beneficial to the recovery of the company's main business.
2. Reorganization attempts have failed for three consecutive years, and transformation is still on the way.
Only four months have passed since the last acquisition of Longyu Electronics was terminated, and the company was suspended and restructured once again. On February 17, the China Securities Regulatory Commission issued new refinancing regulations. The company determined that the restructuring did not meet the requirements of the new regulations, and the restructuring was terminated once again.
In fact, the company continues to promote the strategic layout of intelligent manufacturing. In 2015, the company signed a strategic cooperation agreement with the National Remanufactory Center to establish a metallurgical remanufacturing technology research center; signed an overseas strategic cooperation framework agreement with China Steel Equipment; joined the Ma'anshan Economic and Technological Development Zone to establish the Ma'anshan Taier Intelligent Industrial Park, introduced Shentai Intelligent and Ruicong robot projects into the park, participated in the establishment of the Aerospace Zijin Civil-Military Integration Industry Investment Fund to lay out industrial intelligence industries such as Industry 4.0 and military industry. Furthermore, the majority shareholder investment company controls the Nanjing Additive Manufacturing Research Institute, and Professor Lu Bingheng, an academician of the Chinese Academy of Engineering, is the director, striving to build the strongest research base in the field of additive manufacturing in China. However, these businesses are still in the nurturing period and are not yet able to contribute to performance, and the company's transformation into intelligent manufacturing is still on its way.
3. Profit forecasts and investment suggestions.
We expect the company's net profit in 2017 to be 20 million and 30 million respectively, and the corresponding PE will be 224 times and 150 times respectively. This is the first coverage, and there will be no ratings yet.