1Q17 performance exceeded expectations
Easy special announced 1Q17 results: operating income of 884 million yuan, an increase of 52.2% over the same period last year; net profit belonging to the parent company was 59.4 million yuan, an increase of 68.0% over the same period last year, corresponding to a profit of 0.03 yuan per share. The better-than-expected growth was mainly due to steady growth in photovoltaic and data center business, as well as new photovoltaic revenue from 2H16. Gross profit margin decreased 1.9ppt, during the expense rate decreased 5.1ppt, due to a substantial increase in revenue from photovoltaic system integration with low gross margin.
Trend of development
Photovoltaic plate to boost growth, 2H17 growth or slow. The company already has about 200MW photovoltaic power stations connected to the grid and will contribute to the performance increment in 2017. The rapid development of the photovoltaic industry in 2016 led to a rapid growth of 49% in sector revenue. However, due to the electricity price adjustment in the middle of the year, the demand for photovoltaic products in 2H17 is likely to decline similar to that in the same period in 2016.
The performance elasticity of the rechargeable pile plate increased in 2017. Revenue from charging piles in 2016 was only 13.34 million yuan, down 86 percent from the same period last year. However, the company has built charging stations in Dongguan, Guangzhou and other cities, and will expand the intelligent three-dimensional parking market. The production and sale of new energy vehicles will accelerate the investment in charging facilities, and the charging pile plate is expected to break out in 2017.
High-end power supply and data center business growth is solid. The revenue growth of the sector is mainly due to the high growth of data center products and solutions, which has been successfully applied to the data center projects of Tencent, Baidu, Inc. and China Mobile Limited. The company actively explores the use of BT, BOT and construction of self-operation of a variety of cooperation models, and invests in Guo Fu Guangqi to expand IDC and cloud computing business. The future growth of UPS and data center sectors is guaranteed, but there is still uncertainty about new business development.
The equity incentive plan is issued. The company intends to grant a total of 45 million shares to 460 people, including directors, middle executives and technical backbones, with 38 million shares for the first time, with a total of 5.92 yuan per share. The performance evaluation target of the company is that the annual net profit in 2017-18-19 will not be less than 120% of the annual growth rate of 30x70max. This incentive covers a wide range of areas, which is conducive to mobilize the enthusiasm of employees, and the higher performance evaluation goals also demonstrate the management's confidence in the company's performance growth.
Profit forecast
Keep the forecast of EPS 0.23 to 0.28 yuan (adjusted for equity) for 18 years in 2017.
Valuation and suggestion
At present, the company's share price corresponds to the 2017 41x Pamp E. Share prices have pulled back after a sharp rise in high delivery catalysis, but current valuations are still high in the historical range. We maintain a neutral rating and target price of 11.10 yuan (adjusted for equity), corresponding to the 2017 48x Ppace E.
Risk.
Photovoltaic industry power restrictions and electricity price subsidies are reduced; production and sales of new energy vehicles are lower than expected.