I. Overview of events
The company released its annual report in 2016: operating income was 3.889 billion yuan, an increase of 26.31% over the same period last year. The net profit of shareholders belonging to listed companies was 9.184 million yuan, up 44.27% from the same period last year; the net profit of shareholders belonging to listed companies after deducting non-profits was 8.21 million yuan, up 114.79% from the same period last year; and basic earnings per share was 0.0365 yuan, up 35.69% from the same period last year.
II. Analysis and judgment
The overall operation of copper tube processing business is good, and the overall performance is stable and rising.
The company's overall business performance has increased steadily, achieving the budget target at the beginning of the year. In 2016, the company stepped up efforts to optimize the product and customer structure of the copper processing part, strengthened the prevention and control of the mining, sales and production links of the copper processing industry, and better controlled the settlement risk caused by copper price fluctuations. Although this segment of revenue has decreased compared with 2015, the gross profit margin has increased slightly.
Revenue from trading products has doubled, and gross profit needs to be improved.
In recent years, relying on its advantages in management, channel and settlement, the company has made great efforts to develop its trade business, and was approved as a "pilot enterprise of supply chain management in Guangdong Province" in 2016. The company's revenue from trading products increased from 142 million yuan in 2014 to 1.032 billion yuan in 2015 and to 2.189 billion yuan in 2016, surpassing the revenue of the copper processing industry for the first time, but the gross profit margin decreased by 1.64 percent, and the business structure needs to be further optimized.
Make rational use of the company's own funds and assets and expand the way of making profits
While further developing the main business, the company has actively expanded the profit mode of non-main business from two aspects, all of which have achieved certain results: first, under the premise of fully protecting the company's daily operating funds and the company's normal business activities and effectively controlling risks, appropriate part of its own funds should be used in venture capital. Secondly, re-allocate resources to subsidiaries, improve the utilization rate of land and factories, reduce energy consumption and costs and improve the overall profitability of enterprises through the comprehensive utilization of idle factories and offices or renting out.
Third, profit forecast and investment suggestions
According to our judgment on the future development of the company, it is estimated that the EPS in 2017-2019 is 0.17,0.25,0.31 yuan, corresponding to PE is 96 times, 65 times, 53 times, given a "cautious recommendation" rating.
Fourth, risk tips:
Processing fees fell and trade growth fell short of expectations.
