Key data of financial reporting
In 2016, the company achieved operating income of 4.138 billion yuan, a decrease of 0.72% over the same period last year, and a net profit of 417 million yuan, an increase of 19.27% over the same period last year, and EPS 0.13 yuan. In the first quarter of 2017, operating income reached 761 million yuan and 73.4 million yuan, up 2.69% and 31.16% respectively over the same period last year. The annual quarterly report results are in line with expectations. The company expects net profit in the first half of 2017 to change-26.28% to 2.69% compared with the same period last year, and disclosed that it plans to pay a dividend of 0.36 yuan for every 10 shares, with an operating income target of 4.5 billion yuan for 2017.
Main points of investment
Investment income and fair value change income have a greater impact on net profit. In 2016, the development of the traditional downstream market faced by the company's cable products slowed down and competition intensified. Affected by this and other factors, the company's operating income fell 0.72% year-on-year to 4.138 billion yuan, and gross profit margin fell 1.64% to 17.85% year-on-year. The main reasons for the nearly 20% increase in net profit attributable to shareholders over the same period last year are: 1) the fair value change income related to hedging recorded 54 million yuan, compared with 64800 yuan in the same period last year; 2) investment income recorded 169 million yuan, compared with 43 million yuan in the same period last year.
Actively open up new markets, implement the internationalization strategy, and promote the development of the main industry in 2016, the company has undertaken a number of high-end projects and maintained strong competitiveness in market segments such as submarine cables, UHV wires and rail transit cables. and made gratifying breakthroughs in overseas market expansion, including:
Through the supplier qualification registration of Singapore Electric Power Company, the supplier qualification examination of British National Oil Company, and the audit of India's national grid factory, won the bid for projects in Saudi Arabia, Cameroon, Pakistan, Nepal, Vietnam, Bangladesh, Singapore and other countries. We are particularly optimistic about the company's development prospects in the countries along the "Belt and Road Initiative" route, and expect that the contribution of overseas markets (direct and indirect exports) to the company's cable revenue is expected to reach about 15 per cent by 2020.
Maintain the "overweight" rating
We expect that from 2017 to 2019, the company will realize the EPS of 0.14,0.16,0.17 yuan under the current equity, corresponding to 28.6,25.6 and 23.1 times Pmax E.
Risk hint
Market competition may intensify, new business development with overseas market promotion or low expectations.
