Events:

The company disclosed its annual report: annual revenue was 2.352 billion yuan, down 9.37%, profit was 244 million yuan, down 9.52%; of which Q4 revenue was 692 million yuan, down 10.95%, profit was 22 million yuan, down 83.43%; profit distribution plan was 1.83 yuan for 10 distributions.

Comments:

The main business has declined, and profitability is basically stable.

Since the withdrawal of home appliances from the countryside in 2012, the solar hot water market, especially the retail market, has declined continuously. Aiken expects the total sales of light and heat nationwide in 2016 to be 39.5 million tons, down 9.2% from the same period last year, and the market scale has dropped to the 2009 level (42 million tons). However, the decline has been significantly narrower than in the previous two years, as the market continues to reshuffle, flat products and engineering market share increases, leading enterprises such as Sunrise Oriental are expected to gradually stabilize in the future. In addition, the cultivation of new products for clean water and air energy is also expected to contribute to increment; at the profit level, although the decrease in interest income affects the rate of financial expenses, thanks to product upgrading, the return of marketing investment and the increase in financial income, the annual attributable net interest rate is still 10.37%, slightly reducing 0.02pct.

Shuaikang completed the amalgamation, and the kitchen electricity business became the main focus.

The company's acquisition of 75% equity interest in Shuaikang Electric was completed in March. As one of the representatives of Zhejiang kitchen and electricity, Shuai Kang performed poorly in recent years, but it still has good brand strength and product power by virtue of years of accumulation, while as a leader of solar water heaters, Sunrise East has perfect third and fourth line channels, and currently has more than 3000 first-class outlets and nearly 30,000 second-level outlets. In the future, Shuaikang will quickly promote the sinking of channels with the help of the parent company's strong third-and fourth-line channel network, and the warming of third-and fourth-line real estate will also provide support for Shuaikang's growth. at the same time, with the investment of capital resources in the Sunrise East, Shuaikang will gradually develop its strength in the first and second tier market in the future, and is optimistic about the integration prospect of Shuaikang after the completion of the acquisition.

Maintain the recommended rating

Based on the current low market concentration of the tobacco stove market, the cooperation of the two chefs in the field of electricity and the expected integration of channels and manufacturing, Shuaikang is expected to return to the growth track in the future. in addition, the company's original main solar water heaters are also expected to stabilize and pick up. Taking into account the 17-year Shuaikang table, the company is expected to have an EPS of 0.44,0.53 yuan in 17 and 18 years, corresponding to the current PE 21,18 times, maintaining the "recommended" rating.

Risk hint: solar hot water market continues to decline, Shuaikang integration is lower than expected