Event: the company announced operating income of 3.304 billion in 2016, an increase of 33.63% over the same period last year, and net profit belonging to the parent company was 327 million, an increase of 34.27% over the same period last year.
Comments:
1. Steady growth of traditional business and continuous promotion of product research and development. The company enlarges the research and development of seat and rearview mirror position and seat heating and ventilation integrated control module and the third generation seat horizontal motor project to help the company enrich new automotive electronics products, expand new customers and improve the company's overall competitiveness.
2. The performance of the new torch exceeds the promised profit, and its long-term growth is determined. In 2016, the new torch had operating revenue of 1.167 billion yuan and net profit of 204 million, exceeding the promised profit. The revenue and profit growth of the new torch has been determined, and the company has successfully entered SAIC-Volkswagen supporting system in 2016, reflecting the continuous improvement of the company's ability to meet middle and high-end customers. With the commissioning of the new torch factory in 2018, the hub bearing business will have further development.
3. Deyang Electronics' profit falls short of its promise and will be made up in cash. Deyang Electronics achieved a net profit of 43.1189 million in 2016, promising a net profit of 80 million yuan in 2016 and 120 million yuan in 2017.
4. Cash acquisition of Chengye shares will thicken the company's performance and expand the channels of high-quality vehicle customers, and the synergy will gradually appear. Shuanglin to own brand customers, Chengye to SAIC Volkswagen-based. Chengye shares promises that the deducted non-net profit in 2016,2017 and 2018 will not be less than 53 million yuan, 53 million yuan and 59.5 million yuan respectively.
5. DSI is expected to be injected this year to expand new customers and maintain growth. On DSI products, in addition to deepening the cooperation with Geely, the company continues to supply Boreboyue modified models, and is also actively opening up new customers, which is expected to enter the supply system of automobile enterprises such as BAIC and Southeast, and reduce the risk of a single customer. We expect Shuanglin Group to launch DSI injection into listed companies this year.
6. Profit forecast. We estimate that the company's EPS in 2017 and 2018 will be 1.05 yuan and 1.39 yuan respectively. After considering the acquisition of Chengye, the EPS will be 1.19 yuan and 1.53 yuan, and the corresponding valuation will be 21.9X and 16.9x.
7. Risk hint: the growth of the downstream vehicle industry is not as expected.