This report is read as follows:
The company released its first quarterly report for 2017, with first-quarter revenue + 34.42% and net profit + 38.48%, slightly exceeding expectations. The depreciation of RMB still has a pull on income, and the decline in exchange earnings + the rise in the price of raw materials + equity incentive amortization leads to a decline in performance growth.
Main points of investment:
The company released its quarterly report for 2017, with operating income of 279 million yuan in the first quarter of 2017, + 34.42% year-on-year, and net profit of 19.53 million yuan, + 38.48% compared with the same period last year, corresponding to EPS0.07 yuan, in line with expectations. The devaluation of the RMB still has the same effect on the company's revenue side, and the revenue growth rate continues to improve from the fourth quarter (+ 33.85% compared with the same period last year), slightly exceeding expectations. However, due to the volatility after the accelerated devaluation of the RMB, the rapid decline in the contribution of exchange gains, the superposition of high prices of major raw materials and equity incentive charges, resulting in a decline in performance growth. We slightly raised the company's EPS to 0.40 EPS in 2017-2019 to 0.48, 0.53 yuan (+ 0.03, 0.04), and maintained the "overweight" rating, with a target price of 24.91 yuan.
The devaluation of the RMB and the recovery of the US economy still have a pulling effect on income. The company's main products are mainly exported to the United States, and the impact of RMB depreciation and US economic recovery on the company's revenue began to appear in the second half of 2016. As the leader of toolbox cabinets, the company's revenue growth was stable and began to show signs of accelerating in the third quarter of 2016. the revenue growth rate in the first quarter of 2017 is still slightly higher than that in the fourth quarter of 2016. we expect the company's revenue to maintain a high growth rate for the whole of 2017.
High raw material prices + reduced exchange earnings + equity incentive costs, performance growth has declined; fixed price increase + equity incentive prices upside down to bring investment safety cushion. The company's main raw material steel remained high after a big rise last year, resulting in a steady decline in gross profit margin. Since 2017, the RMB has no longer continued to depreciate, and the contribution of exchange earnings has declined sharply, while the substantial amortization of equity incentive costs has led to a decline in the company's performance growth in the first quarter. At present, the company's stock price is 15.95 yuan / share higher than the company's fixed price and 16.93 yuan / share price for equity incentive exercise, which has a better investment safety pad.
Catalyst: RMB depreciation; asset securitization or extension is expected to advance.
Core risk: asset securitization or extension expansion is blocked.