Report summary:
The axle and vehicle supporting business was under pressure, and the company's performance declined sharply in 2016. In 2016, the company achieved operating income of 961,3294 million yuan, a decrease of 52.18% over the previous year; net profit for the whole year was 269.443 million yuan, of which net profit attributable to owners of the parent company was 269.431 million yuan, a decrease of 73.27% over the previous year. The axle and vehicle supporting business segment declined significantly year-on-year, mainly due to the overall downturn in the industry.
The main reason for the decline in performance was the industry-wide contraction in 2016. In 2016, due to the decline in domestic and foreign railway equipment market demand during the same period (mainly in foreign markets), the total number of orders for the company's main products decreased to varying degrees. Axles are an important product segment for the company's revenue. Its production and sales volume fell by more than 60% year on year, and inventories increased sharply; railway vehicles fell 11.23% year on year. The future 70% share of the axle market will be supplied by CRRC. The cost of trucks is rising but the unit price remains unchanged, which continues to reduce profit space, and competition in the domestic market is fierce.
International market breakthroughs, high-end product positioning and new field expansion are important highlights of the company's development.
In 2016, the company completed the trial production and first batch supply of German Rars railway trucks and the R&D and trial production of the Indonesian bus chassis project, achieved a leap forward of railway truck steel structures into the bus field, and continued to break through in the international market; the 350 km/h and 250 km EMU axles successfully completed operation assessment and technical review, and achieved small-batch delivery, which accelerated the localization process of EMU axles and the development of high-end products; the company will also expand in fields other than rail transit, laying out new business fields including nuclear power, wind power, ships, etc. Profit points.
Profit forecast and investment rating: The company's restructuring is an important focus of the company's new profit growth point. The company's 2017-2019 EPS is expected to be 0.07/0.06/0.06 yuan, giving it an “increase in holdings” rating.
Risk warning: Continued industry integration and competition intensifies; new fields and international market expansion are blocked; market systemic risks.