Brief comment on performance
In 2016, the company realized operating income, operating profit and net profit of 1.74 billion yuan, 113 million yuan and 109 million yuan respectively, up 34.34%, 533.53% and 205.76% respectively over the same period last year. Achieve comprehensive dilution of EPS0.09 yuan per share, slightly higher than expected. The net cash flow of operating activities was 158 million yuan, higher than the net profit of the same period. On a quarterly basis, the year-on-year growth rate of Q1/Q2 revenue was 54.22%, 79.55%, 20.98% and 7.08%, respectively, and the year-on-year growth rate of net profit was 3.84%, 922.16% and 11.79%, respectively. The company's 2016 distribution plan is a cash dividend of 0.38 yuan (including tax) for every 10 shares.
Business analysis
Revenue continues to rise, reducing costs and efficiency effectively promote profit growth. In 2016, the company's revenue continued to grow rapidly (+ 34.34%), and its gross profit margin increased to 20.46% (+ 1.04pct.). During this period, the expense rate decreased by 3.11pct. . Among them, the sales expense rate and management expense rate have decreased (0.8pct./3.04pct.), while the financial expense rate has increased by 0.74 pct. this is mainly due to the consolidation of the Donghai Island project in May last year, and the interest on related debt financing has ceased to be capitalized, which is all reflected in the profits and losses of the current period. At the same time, the RMB depreciated substantially this year, and the exchange loss increased. The return net profit margin of the company is 6.24% (+ 3.4pct.), and the company's profitability continues to improve.
Donghai Island production capacity fully released, self-adhesive production line layout accelerated improvement. The company's core business mainly includes three pillars: carbon-free paper, thermal paper and self-adhesive label materials. Among them, the products of the Donghai base mainly cover the middle and high-end markets of carbon-free paper and thermal paper, with the release of the production capacity of the company's Donghai Island base, while the base further implements lean and effective management, and the production efficiency and product quality have also improved steadily. The company also achieved high revenue growth in 2016. In addition, affected by the relocation of the Zhanjiang self-adhesive production line, self-adhesive production and sales have declined to a certain extent compared with last year. At present, the relocated 4x5 self-adhesive coating production line is being debugged. At the same time, Zhejiang Pinghu base self-adhesive coating production line has been put into production, self-adhesive production capacity will also be greatly increased, the future will play a synergistic and complementary effect in Zhanjiang base. Due to the characteristics of high-tech content, high performance and high added value, with the continuous development of China's economy and the rapid development of e-commerce and logistics industry, the development prospect of domestic special paper industry is also good in the future. We believe that, as a leader in the domestic specialty paper industry, the company still has huge room for profit growth in the future by continuously strengthening product research and development, improving channel layout and consolidating market share.
The exclusive supplier of VAT invoice paper continues to benefit from "business change and increase". The company has been designated as the exclusive supplier of VAT ticket anti-counterfeiting carbonless paper since 1996, and the company also won the VAT common ticket anti-counterfeiting carbonless paper procurement project in 2013. Since May 1, 2016, the increase in business reform has been carried out in an all-round way, and the use of VAT invoice paper has increased greatly. In 2016, the company's carbonless business revenue increased by 42.86% compared with the same period last year, and the company's carbonless carbon paper anti-counterfeiting technology for VAT invoice anti-counterfeiting occupies a leading position in China. In the future, with the comprehensive improvement and implementation of the revenue reform and increase policy, the company's revenue performance of the corresponding business side will also continue to improve.
China Chengtong central enterprise reform started, the follow-up impact is worth looking forward to. On September 26, 2016, the China State-owned Enterprise restructuring Fund, the largest private equity fund in China, with the company's actual controller Chengtong Group as the main sponsor, was established, with a total size of 350 billion yuan and an initial fund of 131 billion yuan. 80% of the funds will be used for the restructuring of state-owned enterprises. At present, the fund has participated in Air China Limited's non-public offering project, and Chengtong Group has also signed strategic cooperation agreements with Great Wall assets and China Merchants Group respectively, which will further strengthen the experience in the reform of state-owned enterprises through the combination of various powers. to achieve effective complementarity of resources and improve the operation efficiency of state-owned capital reflects the strategic positioning of the fund to promote the structural adjustment and transformation and upgrading of central enterprises. As the only listed company in China Chengtong system that has not taken any state-owned enterprise reform action, the company may benefit indirectly from China Chengtong's central enterprise reform process in the future.
Risk factors.
The risk of price fluctuation of raw materials; the decline of gross profit margin of the main business; and the specific content of China Chengtong's central enterprise reform fell short of expectations.
Profit forecast and investment suggestion
The "business reform and growth" has been launched in an all-round way, the curtain of China Chengtong's central enterprise reform has been opened, and the company's business fundamentals and national reform expectations are worth looking forward to. We forecast that the EPS of the company from 2017 to 2019 will be 0.35, 0.42, 0.46 yuan per share (three-year CAGR75.9%), corresponding to the PE score of 22-18-16, maintaining the company's "buy" rating.