Core views:
Net profit returned to the mother increased 13 times year-on-year
In 2016, the company achieved revenue of 13.565 billion yuan and net profit of 176 million yuan, a year-on-year increase of 23.60% and 1310.77%, respectively, and an EPS of 0.20 yuan. In 2016, the main product, electrolytic lead, completed 408,700 tons, an increase of 17.20% over the same period last year; cathode copper completed 115,100 tons, an increase of 20.61% over the same period last year; gold completed 6.02 tons, an increase of 50.37% over the same period last year; and silver reached 792.55 tons, an increase of 11.74% over the same period last year.
Price increases combined with cost reduction and efficiency drive performance growth
In 2016, the prices of the company's main products all increased by varying degrees. The profitability of the main products increased, the gross margin of the products increased, and the gross sales margin increased by 4.29% over the same period last year. The company reduced processing costs by more than 3% through creative activities such as benchmarking indicators and improving key indicators.
Channel improvement, industrial upgrading, sustainable performance growth
Environmental inspections have been upgraded, the supply of raw lead and recycled lead has shrunk, consumption has been rising steadily, and industry expectations have improved. Recycling channels are the core competitiveness of the recycled lead industry. The company will invest in the construction of a “waste lead-acid battery recycling network system” covering 6 provinces to establish a nationwide waste battery recycling network. It is estimated that the recycling volume will reach 720,000 tons. With its technical advantages and channel advantages, the company is expected to gain more than 20% of the market share, and profit prospects are good. In order to break the development bottleneck, the company plans to build a technical improvement project for recycling recycled lead resources and efficient clean production based on the principles of equal volume and emission reduction. The self-funded investment was 1,928 billion yuan to build a 160,000 t/a direct reduction production line for oxygen bottom blow melting - liquid lead slag to replace the original 2 80,000 t/a oxygen bottom blow melting - blast furnace reduction production lines.
Give a “buy” rating
It is estimated that EPS in '17, '18, and '19 will be 0.24 yuan, 0.32 yuan, and 0.52 yuan, respectively, and the corresponding PE will be 35, 26, and 16 times, respectively, giving a “buy” rating.
Risk warning: Metal prices fluctuate greatly; the construction of a waste lead-acid battery recycling network system falls short of expectations.