Event

On March 25, Ruitai Technology released its annual report that the company's operating income during the reporting period was 1.755 billion yuan, down 4.88% from the same period last year; the net profit belonging to shareholders of listed companies was 25.2384 million yuan, up 131.56% from the same period last year. Basic earnings per share is 0.1093 yuan.

Brief comment

1. The operation has improved significantly and the momentum of recovery is obvious. During the reporting period, revenue fell 4.88% from the same period last year, significantly narrowing from the decline in the fourth quarter of 2015; net profit was 25.2384 million yuan, up 131.56% from the same period last year. The company has stepped out of the situation of losses last year and its performance has further improved. During the reporting period, China's overall economic situation showed a trend of moderately stabilizing and improving. The output of the main downstream industries of refractories has increased slightly, and the demand for consumable refractories has not decreased significantly, but the overall demand is still insufficient; the output and profits of the refractory industry have declined, and the income growth is also lower than the average level of national industrial enterprises; the operation of refractory enterprises is still beset with difficulties. Under a multi-pronged approach in an unfavorable environment, the company has maintained a stable operation, with only a slight decline in operating income during the reporting period, and a successful turnaround in net profit. With the economic stabilization and industry integration in the future, the enterprise is expected to obtain further development in the further future.

two。 Strict control of costs has achieved remarkable results. During the reporting period, the company's expense rate decreased significantly, from 24.5% in 2015 to 22.7% in the reporting period, of which sales and financial expenses decreased significantly, and management expenses also decreased to a certain extent. In terms of profitability, the company's gross profit margin on sales remained stable; net profit margin bottomed out after falling to a low of-3.0% in the fourth quarter of 2015, rising 4.1 percentage points to 1.1% in the reporting period. The company's ROE rebounded strongly from-19.5% in the fourth quarter of 2015 to 6.6% in the reporting period, a sharp rise of 26.1%, indicating an improvement in the company's profitability.

3. With the diversified development of downstream business, glass business takes the lead. The industry distribution of the company's downstream business is more balanced, unlike 70-90% of the income of the major enterprises in the industry comes from the iron and steel industry, the proportion of the company's steel business income is only about 1/3, and the proportion of cement business income is the same as that of iron and steel. Glass business also accounts for about 20% of revenue. In the first half of 2016, the glass industry took the lead in reviving, and the company took advantage of the potential to actively develop the daily glass market. In the second half of the year, the company further strengthened the development of the glass market, and the operating performance of the glass kiln refractory business plate improved. During the reporting period, the operating income of the glass plate reached 367492 million yuan, an increase of 23.28% over the same period last year, and the sales gross profit margin increased by 5.94% over the same period last year. The business of the cement and steel sectors has also improved, and it is expected that the three industries will continue to pick up in 2017 as supply-side reforms continue to push forward, and the company's operation is expected to continue to improve.

4. Industry and research is outstanding, full of stamina. The company is a national key high-tech enterprise, relying on the strong scientific research and development background of the controlling shareholder, China General Institute of Building Materials Science and Research, it has a large number of professional and technical personnel and skilled highly skilled workers as well as excellent instruments and equipment and laboratories with good conditions. Successfully developed environmentally friendly alkaline refractories, special ramming materials for waste heat power generation, low thermal conductivity composite mullite bricks, high corrosion resistant refractories and other refractory products and production technologies that serve energy saving and emission reduction in high temperature industry and green environmental protection, and realize industrialization within the enterprise, is the leading enterprise in the industrialization of scientific and technological achievements in the industry. In 2016, the company applied for 114 patents (77 invention patents and 37 utility models) and 46 authorized patents (28 invention patents and 18 utility model). The company will continue to invest in R & D in 2016 and can be expected in the future. The outstanding advantage of industry and research is the company's core competitiveness, which makes the company's products invincible in the ever-changing market environment with higher quality.

5. The two talents are merged and the business space is expanded. Notice of August 22, 2016, received notice from SASAC to agree to the reorganization of China Building Materials Group and China Materials Group. China Building Materials Group Co., Ltd. changed its name to China National Building Material Group Co., Ltd., and China National Materials Group Co., Ltd. was transferred to China National Building Material Group Co., Ltd. The merger of the two talents is the inevitable result of the mature stage of the industry, which is expected to fully integrate assets, optimize the allocation of resources and improve efficiency, and realize the State Council's leading idea of "bigger, stronger and better" for state-owned enterprises. Integration is worth looking forward to. After the merger of the two materials, the cement business and glass fiber business under the former China Wood Group will make the company's business have room for further expansion, and the operating situation is expected to be further improved. Moreover, the national reform is expected to contribute to the improvement of the company's future operational efficiency.

6. Profit forecast and investment rating: we expect the company's operating income to be 1.755 billion yuan and 2.106 billion yuan in 2017 and 2018, an increase of 20% and 10% over the same period last year. The return net profit is 35 million yuan and 46 million yuan respectively, and the EPS is 0.15,0.20, maintaining the "overweight" rating.