Main points of investment
Event: the company released its quarterly report for 2017, with operating income of 524 million yuan in the first quarter, an increase of 49.29% over the same period last year, and net profit of 173 million yuan, an increase of 26.89% over the same period last year, in line with market expectations.
Miki Intelligent merge Table drives growth, and performance growth is expected to rise quarter by quarter: the company's performance increment in the first quarter is mainly contributed by Miki Intelligence in February and March, and after the second quarter, as the mobile phone supply chain enters the pulling phase, the gradual delivery of domestic orders superimposed by Miki Intelligence is expected to drive the company's performance growth further upward, superimpose the turnround effect of the main highway industry, and maintain the judgment of 50% performance growth for the whole year.
The acquisition of Miki is a perfect match, and the performance is expected to continue to exceed expectations: Miki Intelligence, founded in 2005, is the first batch of professional ODM manufacturers of mobile phones, tablets and other electronic products in China, with deep technology accumulation and slow development because of its conservative cash flow and business strategy. Chutian Expressway has now completed its acquisition, and with the low-cost financial support of its parent company, Miki Intelligence is gradually increasing its efforts to develop the domestic market. In the future, it is expected to rely on major customers to build boutique models and achieve explosive growth in the domestic market. At the same time, combined with the company's layout in overseas markets and Internet of things, coupled with a good incentive mechanism, Miki Intelligent performance is expected to continue to exceed performance commitments.
The main highway industry has gradually reversed its losses, with an average annual growth rate of 15%: the company's highway assets mainly include Hanyi, Dasui and Huangxian, of which Hanyi has a very strong profitability, and we expect the single net profit to be close to 600 million yuan. however, due to the influence of decapitation and other factors, the average annual loss is about 180-200 million yuan, which is a drag on the overall net profit of the company's highway business. At present, the construction of the upper and lower reaches of the Dasui and Huangxian section is gradually accelerating, and we estimate that the two loss-making lines are expected to reverse losses of more than 60 million yuan a year, coupled with the steady growth of about 3-5% a year in the Hanyi section. the company's traditional business is expected to maintain an average annual growth rate of more than 15 per cent in the future.
Hubei national reform forerunner, the follow-up extension is expected to be strong: due to the highway business toll limit, the company has been hoping to open up a second main business, the first single epitaxial M & A landing in 2016, choose the electronics industry as a starting point, the effect is good. The company has made it clear in the annual report that it will pay close attention to Miki intelligent upstream and downstream enterprise expansion, regional expansion, channel collaborative product development and other industry extension opportunities. Looking for opportunities to continue to implement industrial mergers and acquisitions or equity investment, follow-up epitaxial mergers and acquisitions are expected to be strong.
Investment advice: with an average annual growth rate of more than 15% in traditional business, Miki Intelligent performance is expected to continue to exceed expectations. We expect the company's annual net profit in 2017-18-19 to be RMB 6.01 million, with a growth rate of 53%, 31% and 20%. Give the highway part 20 times valuation in 2017, Miki Intelligence 40 times valuation in 2017, corresponding to the target price of 8.67 yuan, superimposed potential extension expectations, "Buy" rating.
Risk hint: the loss line reversal range is low expected; Miki intelligent customer expansion progress is low expected.