1Q17 performance meets expectations
Century Ruier announced 1Q17 results: operating income was 30.79 million yuan, down 38% from the same period last year; net profit attributed to the parent company was-21.42 million yuan, down 1646% from the same period last year, corresponding to earnings per share of-0.04 yuan. As expected.
The reduction in the execution of railway orders led to a drop in revenue. The mileage of the national railway completed in 2016 fell 66% compared with the same period last year, and its revenue was greatly affected because the company's main business was a post-station project. In addition, the annual tender number of railway traffic safety monitoring products is not uniform, resulting in quarterly fluctuations in the level of income. Due to the decline in economies of scale, gross profit margin fell sharply 16.8ppt.
The expense rate has increased and the net profit margin has dropped sharply. Due to the inclusion of Yi Wei Information in the consolidated statements, coupled with a decline in economies of scale, the company's sales / management / financial expense rate increased 25.2ppt/30.5ppt/4.2ppt compared with the same period last year. Net profit margin fell 72.3ppt compared with the same period last year.
Net cash outflow from operating activities decreased. By the end of the first quarter, inventories increased by 28.97 million yuan compared with the beginning of the year, while accounts receivable and payables decreased by 95.77 million yuan and 11.02 million yuan.
The cash flow of business activities was 38.31 million yuan less than the same period last year.
Trend of development
Continue to follow the progress of Beihai Telecom acquisition. The company intends to acquire 100% stake in Beihai Telecom to lay out the field of passenger information system. Beihai Communications is mainly engaged in passenger information system and public broadcasting system, which has a synergistic effect with the company's original business in terms of customers and technology. Beihai Telecom has pledged a net profit of 40 million yuan / 50 million yuan / 61 million yuan from 2017 to 2019, with an average annual compound growth rate of 23%, and is expected to increase EPS by 23% in 2017. At present, we have received the notice of acceptance by the CSRC and look forward to the smooth progress.
Profit forecast
We keep our earnings per share forecast for 2017 / 2018 unchanged.
Valuation and suggestion
At present, the company's share price corresponds to the 2017 38x Pram E. Considering the downward shift in the valuation center of the sector, we maintained a neutral rating, but lowered the target price by 11.1% to 8.81 yuan, which is 5.38% upside from the current share price. Corresponds to 40x 2017 Pramp E.
Risk.
The acquisition fell short of expectations.
