In line with expectations in the first quarter of 2017
Aoyang Technology announced its results for the first quarter of 2017: operating revenue was 1.25 billion, up 20% from the same period last year; net profit attributable to the parent company was 59.48 million, up 80% from the same period last year, corresponding to earnings per share of 0.08 yuan. That's what we expected. During the reporting period, the price of the company's main products viscose staple fiber rose, the health industry grew steadily, gross profit margin increased 1.4ppt year-on-year, month-on-month increase 1.6ppt, at the same time, good cost control, year-on-year decline in 1.1ppt, bringing beautiful performance.
Trend of development
Viscose staple fiber has good profitability. The average price of viscose was 17020 yuan / ton in the first quarter, up 32.3% from the same period last year. Since 2015, the viscose industry has stopped production structurally due to environmental protection, the supply and demand structure has significantly improved, the price bottom has warmed up, the new production capacity of the industry in the next two years is limited, and the annual growth rate of downstream demand has been stable at about 5%. The company has a production capacity of 300000 tons of viscose staple fiber, leading the industry, has a certain scale advantage, and its performance is flexible. The after-tax price increases by 1000 yuan, and the EPS thickens by 0.032 yuan. At the same time, Funing Aoyang, a holding subsidiary, plans to invest in the construction of 160000 tons / year differential viscose project, which will further improve the company's product structure and enhance the profitability of viscose staple fiber.
The large health industry is growing steadily, and the profit contribution is increasing year by year. The layout of the company's large health industrial chain tends to be perfect, with two-wheel drive. At present, four general hospitals are in operation, with 2200 beds open. At the same time, with Zhangjiagang as the central support, a chain network of rehabilitation medical services has been established in East China, focusing on the development of rehabilitation medicine and interacting with the other three branches. In the future, through the chain of rehabilitation hospitals, the company is expected to speed up the realization of remote replication.
Net profit in the first half of 2017 is expected to be 0.92-130 million, up 0.38 per cent from a year earlier. At present, the price of viscose staple fiber is 15650 yuan / ton, up 16% over the same period last year, and the price difference between viscose staple fiber and cotton pulp meal is 7670 yuan / ton, which is 19% higher than the same period last year, and the profit is thicker.
Profit forecast
As the viscose price is slightly lower than expected, we have lowered our earnings per share forecasts for 2017 and 2018 by 14% and 17% from RMB0.48 and RMB0.57 to RMB0.41 and RMB0.48 respectively. XX
Valuation and suggestion
At present, the company's share price corresponds to the 2017 / 18 23x/20x Pamp E. We maintain the recommended rating, but lower the target price by 10.94% to 11.40 yuan, which is 20.13% upside from the current share price. The target price corresponds to the 2017 / 18 28x/24x pram E.
Risk.
The price of viscose fell; the development of big health business was not as expected; the valuation center moved down.