Key points of investment:
The operating efficiency of NdFeB magnetic materials has been steadily improved. In 2016, the company's NdFeB products achieved revenue of 947 million yuan, an increase of 1.24% over the same period last year, gross margin of 18.11%, and an increase of 2.92% over the same period last year. The company is currently one of the rare earth permanent magnet manufacturers in the same industry in China with complete production specifications and varieties, a large production scale, and good product performance. The main end users include well-known companies such as Apple, Samsung, BYD, Philips, and Yutong.
The company is making every effort to build the largest NdFeB production base in China and is moving towards the goal of becoming a leading brand in the international rare earth permanent magnet industry and materials industry.
The profitability of the motor series products has maintained steady growth. In 2016, the company's motor series products achieved operating income of 483 million yuan, an increase of 8.40% over the same period of the previous year, and gross margin of 27.90%, an increase of 0.94% over the same period last year. The company's motor series products now have more than 200 specifications, more than 5,000 varieties, and an annual production capacity of more than 4 million units. The main customers cover more than 40 countries in Asia, North America, Europe, etc. Among its customers are more than 10 global industry leaders. The main customers include Honeywell, Hisense, Galanz, Chigo, etc.
The revenue from the logistics three-dimensional warehouse business has increased significantly, and the technical level is high. In 2016, the company's three-dimensional logistics warehouse sold 9 units, a decrease of 4 units from 2015, but achieved revenue of 96 million, an increase of 38.65% over the previous year. The company developed the first generation of domestic three-dimensional warehouses in 1985, and has now developed into one of the largest logistics equipment and technology integrated manufacturers in China, and has a high market share in the fields of dairy industry, railway information, military industry, explosion-proof, and pharmaceuticals. Currently, it is the only logistics equipment enterprise with explosion-proof electrical production qualifications in China. It has constructed more than 300 logistics projects, spread across 27 provinces, municipalities, and autonomous regions across the country, and is exported to the Middle East and Southeast Asia, covering various fields such as food, medicine, machinery, chemicals, and transportation. Since the company's automated logistics three-dimensional warehouse business started early in China, it has many inventions and patented technologies in this field, and most of its projects are mainly developed independently. In order to strengthen R&D efforts, advanced international logistics concepts were introduced, and technical cooperation was carried out with Gilgen in Switzerland and GBI in the US.
Mergers and acquisitions contributed to the growth in performance. In order to resolve competition in the industry and reduce related transactions, the company purchased 100% of the shares of Ganzhou Dongci Rare Earth Co., Ltd. and 100% of the shares of Zhejiang Hengdian Yingluohua Import & Export Co., Ltd. by issuing shares to achieve a merger of enterprises under the same control of Ganzhou Dongji and Yingluohua Import and Export. Net profit increased by a certain margin over the same period last year.
The future development path is clear. The company is focusing on building a “control technology+motor” precision manufacturing industry platform, building a “component+equipment+engineering” industrial ecosystem through system integration, and vigorously developing business fields such as magnetic materials and drive systems for new energy vehicle motors, fire robots, and fire simulation training systems. The company has published its quarterly report, achieving operating income of 330 million yuan during the reporting period, and net profit of 9.73 million yuan after deducting non-recurring profit and loss attributable to shareholders of listed companies.
We expect the company's earnings per share to be $0.05 and $0.09 respectively in 17-18. Give the holder a rating.
Risk warning: Market risk and project investment risk.