Events:
Jixin Technology released the 2016 annual report, during the reporting period, the company achieved operating income of 1.557 billion yuan, down 12.12% from the same period last year; net profit belonging to shareholders of listed companies was 117 million yuan, down 8.72% from the same period last year; and realized EPS 0.1184 yuan.
Main points of investment:
Domestic income has declined, while overseas income has risen sharply.
In the domestic market, the wind farm project in the "three north" area is limited, resulting in a decline in the overall demand of the wind power market; at the same time, the wind power installation is gradually moving to the south, but the southern wind farm is affected by geographical environment, weather conditions and other factors. the long cycle of wind farm construction and hoisting has led to an increase in delays in issuing orders from machine manufacturers. In view of the above reasons and the increasingly fierce market competition, the company's domestic market achieved sales of 76300 tons and sales revenue of 739.3675 million yuan, down 29% and 33% from the same period last year. In overseas markets, thanks to increased orders from quality customers such as GE and Vestas, foreign markets achieved sales of 60200 tons and sales revenue of 78960.54, an increase of 18% and 26% over the same period last year.
Gross profit margin rose sharply, asset impairment loss affected profit growth during the reporting period, the company's gross profit margin on sales of domestic and overseas products was 22.06% and 32.04%, up 1.59% and 6.85% respectively over the same period last year. The main reason may be that the price of raw materials such as pig iron and scrap is low and the sales price per ton increases slightly from the end of 2015 to early 2016. In terms of the rate of expenses during the period, it fell by 0.91% to 11.25% in 2016 compared with the same period last year. During the reporting period, the company recorded an impairment loss of about 81 million yuan (including 64.8 million yuan in bad debts and 16.2 million yuan in inventory decline), a substantial increase over last year, thus affecting the growth of net profit.
Rapid advance of wind farm project
During the reporting period, the company successfully obtained the approval documents for the total 100MW wind farm construction project, started the wind farm construction layout planning plan, and made phased progress in the project. We expect the wind farm project to be partially completed by the end of 2017 and gradually contribute profits in 2018.
Give a "highly recommended" rating. From 2017 to 2019, we expect the company to achieve an income of 2.2782 billion yuan and a net profit of 1.52 billion yuan and a net profit of 1.52 billion yuan and a corresponding share price PE of 32-26-15, respectively. Considering that the leading position of the company's wind power hub is stable, and is gradually promoting enterprise transformation and upgrading, we are optimistic about the company's medium-and long-term development prospects and give it a "highly recommended" rating.
Risk hint
1. Policy risk; 2. Market competition risk; 3. Power limitation risk
