Main points of investment:
The company issued a forecast for the first quarter of 2017. The net profit of returning home in the first quarter of 2017 was 140 million to 160 million, an increase of 250% to 300% over the same period last year.
The company's performance is in line with our previous expectations, price increases and market upward impact on the company's performance is expected to be more reflected in this year's Q2, Q3, similar to the company's 16Q3 performance. From a year-on-year point of view, the company's performance has improved significantly, indicating that the industry trend is improving, and we think the trend will be early next year. From a month-on-month point of view, there has been a certain decline compared with 184 million in the fourth quarter, but we believe that the month-on-month decline in performance in the first quarter is not a sign of weakness in the industry. There are mainly the following reasons: (1) the positive factors of price increases are not expected to be fully reflected in the second quarter. Since December last year, the industry began to replenish inventory and the frequency of price increases slowed down, resulting in a certain decline in sheet profit from the peak in November last year, while destocking ended at the beginning of 2017, and demand continued to rise. The larger price increase occurred in mid-late February and mid-early March, while the price increase was carried out on the basis of a high price increase of nearly 80% for medium and heavy plate leaflets, which had a more positive effect on performance. However, this process is accompanied by a continuous rise in the price of fiberglass cloth, from 6 yuan / m at the end of December 16 to 8.3 yuan / m in March. In fact, the positive factors of the price increase only began to be reflected in March, but the upstream price increase continued to cause performance pressure in the first quarter. This is similar to the 2016Q3 performance of CCL, although the price increase has continued since the second half of 2016, but the contribution of the price increase to the company's performance mainly began to be reflected in the fourth quarter. (2) from the perspective of industry history, the second and third quarters are the most prosperous, and the first quarter is the weakest. As the upstream of the electronic industry chain, the cycle of the company is different from that of consumer electronics. whether it is Shengyi technology or Jinan Guoji, we can see that the peak season occurs in the second and third quarter, especially from March to July. The first quarter is the weakest season (except for the cycle itself, the company's Spring Festival holiday has a great impact on performance, and we expect the company's production capacity to decline in January due to the holiday. The fourth quarter of 16 coincides with a big cycle in the past six or seven years, so a month-on-month decline is expected.
The company is a "good" company under the logic of price increase. We believe that the company is the target of high quality under the logic of price increase, which mainly lies in the simultaneous rise in price and volume and the self-supply of fiberglass cloth. (1) the company's price and volume have risen. Jin an Guoji's customers are mainly small and medium-sized customers, which are relatively scattered, resulting in higher bargaining power; because small and medium-sized customers are unable to require Jin an Guoji to use what raw materials, the cost-side pressure of Jin an Guoji is controllable, so the price increase rate and frequency of Jin an Guoji are much higher than the market average. On the other hand, the company has high capacity. The company's capacity leeway comes from two aspects: first, the company's Hangzhou second-phase production line is suspended, and if the recovery can quickly increase the company's production capacity, considering the natural growth of the company's production capacity, there is 5 million capacity leeway, corresponding to 12.5% capacity expansion (16-year production capacity climbing, the actual production capacity is estimated to be about 34 million, according to the actual production capacity expansion of nearly 30%). (2) the self-supply of some glass fiber cloth greatly relieves the pressure of production capacity and cost. Nearly half of the company's glass cloth self-supply has further reduced the company's cost pressure, especially in the tense situation of fiberglass cloth.
Give a buy rating. The company is ahead of the sum of the third quarter in the fourth quarter, and we expect the real performance flexibility in 2017. It is estimated that the annual net profit of return to home in 16-17-18 is 3.38 million yuan (9.53 PE), corresponding to 0.46 million yuan (1.31 yuan) of EPS in 16-17-18, and the target price is 28.82 yuan (corresponding to 22 times PE in 17 years).
Risk hint. The market of copper clad laminate is not as expected.
