Brief comment on performance
Lucky Film disclosed its results in the first quarter of 2017: the company's 2017Q1 achieved revenue of 455 million yuan, + 34.43% compared with the same period last year, and net profit of 27 million yuan, + 85.18% compared with the same period last year. The company's business has been transformed successfully and its performance in the first quarter is outstanding.
Business analysis
Product sales increased significantly, and the first-quarter results exceeded expectations: the company achieved a bright growth of + 34.43% in revenue and + 85.18% in net profit in the first quarter of 2017, mainly due to a sharp increase in the sales of various products compared with the same period last year, while effective management expenses were controlled. While the company achieved a substantial increase in sales in the first quarter, the management expenses only increased by 6.29% compared with the same period last year, and the operating condition improved significantly, providing a guarantee for high performance growth. At the same time, during the reporting period, the company received a significant increase in government subsidies, with non-operating income reaching 3.5369 million yuan, an increase of 4,236.84 percent over the same period last year.
The photovoltaic backplane is booming, and the lithium battery diaphragm is about to be put into production: since 2011, the company has vigorously developed photovoltaic, lithium electronics and other emerging industries and spun off the original film business, and is gradually forming three major business layouts of image materials, photovoltaic materials and lithium battery materials. At present, the construction of the fourth phase of the company's solar cell backplane project is progressing smoothly, Line 8 has been fully completed, and pre-construction preparations are under way for Line 14 and Line 15. It is expected that each production line will bring a pre-tax profit of more than 6 million yuan after reaching production. In addition, the company's high-end diaphragm project has achieved small batch trial production, and is preparing for the completion and acceptance of the project. The overseas patent layout starting from Japan is expected to reach production in 2017, and the profit before tax on full production is expected to reach 61.07 million yuan.
Photovoltaic backplane and high-end lithium battery separator business will be the company's new performance growth point in the future.
The company is an important platform for civil-military integration under the Aerospace Science and Technology Group, and will benefit from Hebei Aerospace Industry Group:
The company is an important platform for civil-military integration of the group, and has in-depth cooperation with other scientific research institutes of Aerospace Science and Technology Group in lithium diaphragm, photovoltaic backplane and other business. In addition, the company is located in Baoding, Hebei Province, located in the coordinated development area of Beijing, Tianjin and Hebei, adjacent to the Gu'an Aerospace Industry Group, and will directly benefit from the radiation effect of the joint development of other industries of the Group in the future. According to the description of the No. 1 document of Aerospace Science and Technology Group in 2013, we judge that the company is expected to become the focus of the integration of military industrial resources of Aerospace Science and Technology Group.
Profit forecast and investment suggestion
Lucky Film spun off its traditional film business in 2012 and is currently a subsidiary of Lucky Group engaged in the research and production of new materials. In the company's three major business layouts, photovoltaic materials are rising with the industry, lithium materials are expected to be released in 2017, image materials business is becoming increasingly stable, which can provide effective performance support for the company. In addition, the company is located in the hinterland of the Beijing-Tianjin-Bao Triangle and is expected to directly benefit from the Gu'an Aerospace Industry Park and the coordinated development strategy of Beijing-Tianjin-Hebei and become the focus of the group's military industrial resources integration.
We estimate that the company's return net profit from 2017 to 2019 will reach 0.590.74 / 92 million yuan, a year-on-year growth rate of 43.03%, 25.13% and 24.44%. We believe that the company has clear expectations for future performance growth and is expected to benefit from the reform process of the Aerospace Science and Technology Group, maintain its "buy" rating on the company, and raise its target price for 6-12 months to 20 yuan.
Risk.
The production of lithium battery diaphragm project is not as expected; the growth rate of photovoltaic industry is not as expected; the market scale of traditional photosensitive materials and image materials is greatly reduced; and the process of asset integration is not as expected.