Main points of the report
Event description
The company released a report for the first quarter of 2017 that its operating income was 373 million yuan, an increase of 4.46% over the same period last year. The net profit attributed to shareholders of listed companies was 20.9881 million yuan, an increase of 213.65% compared with the same period last year. EPS was 0.068 yuan, which was lower than market expectations.
Event comment
Rising prices led to an increase in performance, while lower-than-expected sales led to a month-on-month decline in earnings. In the first quarter of 2017, the average price of viscose staple fiber products was 17006 yuan / ton, up 33.47% compared with the first quarter of last year. The sharp rise in product prices is the main reason for the improvement of the company's performance. The price of viscose staple fiber fell from a high of 17400 yuan / ton to the current 15800 yuan / ton in March. Under the influence of the mood of buying up but not down, the overall turnover of the market is light, and the company's sales fall short of expectations. The company's revenue in the first quarter rose only 4.46% from a year earlier, and its performance was 38% lower than the 33.92 million yuan in the fourth quarter of last year. Poor sales also led to 246 million yuan in ending company inventory, up 86.06 per cent from the beginning of the year. At the same time, affected by exchange gains and losses, the company's financial expenses for the quarter were 2.763 million yuan, up sharply from-5.913 million yuan in the fourth quarter of last year.
In addition, the company did well last year, and the payment of year-end bonuses in the first quarter also affected the performance to some extent.
The company's gross profit margin increased, and the expense rate performed well during the period. Benefiting from rising product prices, the company's gross profit margin rose to 6.70% in the first quarter of 2017, up 4.18 percentage points from the first quarter of 2016 and 1.38 percentage points from the fourth quarter of last year. In terms of the period expense rate, the company's sales expense rate was 1.07%, down 0.23% from the same period last year, the financial expense rate was 0.80%, down 0.52% from the same period last year, and the management expense rate was 0.77%, down 1.47% from the same period last year. The decrease in management expenses is mainly due to the adjustment of subjects, such as property tax, land use tax and stamp duty, which were originally included in management expenses. The total proportion of management expenses and business taxes and surcharges was 8.57%, down 0.95 percentage points from the same period last year.
With the arrival of the traditional peak season, product prices are expected to rise again. After the Spring Festival, viscose staple fiber prices first rose and then fell, the former is due to downstream yarn mills to replenish inventory, the latter is due to weaker-than-expected demand, individual enterprises sold at a low price. The current price of the product is around 16000 yuan / ton. With limited new production capacity in the industry during the year, the Ministry of Environmental Protection launched a new round of environmental supervision in April, and the supply side is expected to further shrink; while May is the traditional peak season in the industry, demand will be further boosted; industry inventory is at a low level, and social inventory is currently maintained at about 3 days. Therefore, it is expected that the price of viscose staple products is expected to rise again in the future, which is good for the company's performance.
It is estimated that the company's EPS from 2017 to 2019 will be 0.66 yuan, 0.90 yuan and 0.98 yuan respectively, continuing to maintain its "buy" rating.
Risk Tips:
1. Risk of demand downturn
two。 Market development risk.