Main points of investment
Items:
According to the 2016 annual report released by the company, during the reporting period, the company achieved operating income of 895 million yuan, up 9.13% from the same period last year, while the net profit belonging to the owner of the parent company was 92.71 million yuan, up 108.60% from the same period last year. It is proposed to distribute a cash dividend of 0.2 yuan (including tax) for every 10 shares to all shareholders.
Peace viewpoint:
The parent company is still losing money, waiting for nuclear power project approval to reopen: during the reporting period, the parent company achieved operating income of 256 million yuan, an increase of 18.22% over the same period last year; net profit was-51.53 million yuan, a decrease of 39.10% over the same period last year. The company specializes in ventilation and air treatment system design and product development, manufacturing and sales, in the field of nuclear power market share is the first, in the domestic industry leading position. Although the impact of the Fukushima accident has dissipated since 2015, due to the testing progress of third-generation nuclear power technology, the number of nuclear power projects approved in 2016 is still 0. As a result, the company's performance has been affected, and orders in the nuclear power sector have not yet returned to normal levels. In the future, with the completion of the third-generation nuclear power technology testing, nuclear power projects are expected to be centrally approved, significantly improving the company's performance.
In the fourth quarter, ZTE equipment fulfilled its performance commitment: in 2016, the operating income of ZTE equipment, a wholly-owned subsidiary, accounted for about 71.6% of the total operating income of listed companies. In the environment of slow approval of nuclear power projects, ZTE equipment played a major role in the performance contribution. ZTE equipment is a leading enterprise in China's energy engineering special pipe fittings industry, which has strong market competitiveness and high market share in petrochemical, nuclear power, coal chemical industry, emerging chemical industry and other fields. ZTE equipment performance in the third quarter of 2016 was slightly lower than expected, but in the fourth quarter, it made a net profit of 167.58 million yuan for the whole year, exceeding the net profit commitment of 161.92 million yuan. ZTE equipment has promised to achieve a net profit of 190.37 million yuan and 237.53 million yuan from 2017 to 2018, and the prospect is promising.
Important progress has been made in 3D printing: the nuclear power main steam pipe penetration simulation developed by the subsidiary Southern Zengliang on the electric fusion precision forming technology of heavy metal components and Shanghai Nuclear Engineering Research and Design Institute has been printed, and a series of tests such as physical and chemical performance testing and non-destructive testing are being carried out on the penetrating parts. Next, the company will print the second and third penetrations. The ACP100 pressure vessel developed by Southern Zangliang in cooperation with China Nuclear Power Research and Design Institute on the electric fusion precision forming technology of heavy metal components has completed the first stage of basic performance testing and appraisal, and is currently carrying out special performance testing of ACP100 pressure vessel materials. If this technology can be used in the field of nuclear power in the future, the market space is very broad.
Investment suggestion: ZTE equipment fulfills its performance commitment and its future development is promising. If nuclear power is approved to restart in 2017, the company's operating income in ventilation and air treatment equipment will also gradually pick up, with a general trend for the better. It is estimated that the EPS in 2017, 2018 and 2019 will reach 0.26,0.66 and 0.73 yuan respectively, and the E value of the current stock price will be 48 times, 19 times and 17 times respectively. Maintain the recommended rating. This time, the performance forecast of Nanfeng shares has been adjusted, the previous forecast EPS for 2017 and 2018 is 0.42 yuan and 0.60 yuan respectively, the main reason for the adjustment is that the approval progress of the nuclear power project in 2016 is lower than expected, and the company's orders in the nuclear power field have not yet returned to the normal level; if the nuclear power project approval in 2017 is accelerated, and accordingly bring more orders for the company, the corresponding income and net profit will be more reflected in 2018 and 2019.
Risk tips: (1) the approval speed of nuclear power projects continues to be lower than expected; (2) the research and development and promotion of 3D printing technology are not as expected; and (3) due to the macroeconomic downturn, the downstream demand of ZTE equipment has declined.
