Events:
The company achieved an operating income of 1.377 billion yuan in 2016, an increase of 15.14% over the same period last year. The net profit attributed to the parent company was 49.34 million yuan, an increase of 20.51% over the same period last year. After deducting non-recurring profits and losses, the net profit was 391.3 billion yuan, an increase of 32.43% per share. In the first quarter of 2017, the operating income was 375 million yuan, an increase of 36.31 percent over the same period last year, and the net profit was 14.1 million yuan, an increase of 5.85 percent over the same period last year.
Comments:
The company's revenue and profits rose steadily in 2016. In terms of expenses, sales expenses and financial expenses are relatively stable, while management expenses increase more. It is mainly due to the increase in depreciation and other expenses caused by the new fund-raising projects, as well as the increase in scientific research expenses caused by the experiment of differentiated products in the field of functional sugar and special medicine.
From a business-by-business point of view, the company's business structure continued to optimize in 2016. The company provided strong support for animal nutrition business by jointly building a joint laboratory with Shandong Academy of Agricultural Sciences, and the operating income of feed products rose sharply, from 128 million yuan in 2015 to 259 million yuan, accounting for 18.79 percent of the company's revenue, up from 10.67 percent in 2015. In addition, the company focuses on the "big health" strategy of functional sugar, investing 500000 yuan and 10 million yuan respectively to set up two subsidiaries, Guoxin testing and Zhongjikang Special Medicine, to further promote the company's "big health" strategy and consolidate the leading position in the functional sugar industry. In 2016, the operating income of the functional sugar business represented by oligosaccharides increased from 180 million yuan to 253 million yuan. The proportion of main business continued to rise, from 15.67% to 18.38%. With the company's new 5000 tons of galactose oligosaccharide project and 5000 tons of crystal trehalose project gradually put into production, it is expected that the company's future profit space will be further opened.
Yongyu Investment transferred the shares of the company at the price of 20 yuan per share and became the new controlling shareholder. In addition, Ningbo Mengpu Fortis assets also transferred about 10% of Baolingbao's shares at a price of 20 yuan per share, making it the company's second largest shareholder. The premium transfer mode of the two equity investment companies shows their confidence in the long-term development of the company in the future and pays attention to the layout of the health field of new shareholders.
The target price is 16 yuan to maintain the "buy" rating:
We predict that the company's EPS from 2017 to 2019 will be 0.16,0.20,0.23 yuan respectively, with a target price of 16 yuan, maintaining a "buy" rating.
Risk hint: the risk of raw material price fluctuation and the risk that the promotion of functional sugar products is not as expected.
