Items:
The company issued an announcement: it gave a detailed reply to the inquiry letter from the annual report of the Shenzhen Stock Exchange and the recent query reports from the public media, and at the same time, some directors, supervisors and senior managers of the company planned to increase their holdings of the company in the next month, totaling 280-300 million yuan.
Comments:
In 2016, "eBay" business accounted for 78.46% of the total revenue. Due to business structural factors, the current business types of companies with high gross profit margin in the short term can be classified into three categories: e (project design), P (equipment sales) and EPC (project general contracting). In 2016, the company realized revenue of 865.26 million, including 186.35 million of project design (E) orders (21.07% of total revenue), 496.6 million of equipment sales (P) orders (57.39% of total revenue), and 182.3 million of engineering general contracting (EPC) orders (21.54% of total revenue). From the perspective of the company's 2016 revenue structure, project design (E) and equipment sales (P), which maintain a gross profit margin of more than 70%, accounted for 78.46% of the total revenue, of which Indonesia River Project and Jinchuan Phase I project were the main sources of revenue contribution last year. It is due to the structural factors of the company's current business that the short-term gross profit margin is high. In the medium to long term, with the gradual increase in the number of EPC projects and the recognition of revenue from completion, we expect the company's overall gross profit margin to decline to about 50%.
Indonesia's Dahe project type is "Edoup". Due to the contractual payment method, the accounts receivable for 16 years is relatively high. In the first quarter of 17, the Indonesian Dahe project has significantly improved its business including engineering design (E) and equipment supply (P). Among them, the engineering design part amounts to 54 million US dollars, which has been completed by 40.13%; the equipment supply part is 363 million US dollars, and the first equipment supply has been completed at present. Due to the owner's shipping date, the shipments of Dahe project were concentrated in the fourth quarter of 16, while the payment was postponed to the first quarter of 17, so the accounts receivable of Dahe project in the fourth quarter of 16 was 530 million. So far, the company has received payment of US $79.5576 million from the owner of Dahe Project from January to April 2017, and the problem of accounts receivable has been basically resolved.
We believe that the high gross profit margin of the Indonesian equipment sales business questioned by the public media is mainly due to the following reasons: the technology premium brought about by the originality of ① 's core technology. The company's core technology independent research and development, technical and economic benefits and environmental benefits are outstanding; the core equipment is independently manufactured by the company, the cost is low. The impact of ② export tax rebate. The comprehensive rebate rate for the export equipment of Indonesia's Dahe project is about 15%, resulting in a higher gross profit margin for export equipment than for domestic sales under the same circumstances. The risk premium caused by the uncertainty of ③ overseas projects. Therefore, the high gross profit margin of Indonesian projects makes sense.
The second increase of senior executives' holdings in half a year shows the strong confidence of management in the development of the company. In February this year, the company's substantive controllers and senior executives once increased their holdings by 4.13 million shares, with an average price of 32.13 yuan per share and an increase of 133 million yuan. This is the second time that senior executives have increased their holdings in half a year, and the scale of this increase is much larger than that of the last time, reflecting the firm confidence of senior executives in the future development of the company.
Although the market has all kinds of doubts about Shenwu energy saving, we believe that Shenwu energy saving performance has high growth, strong long-term technical verifiability and large market space, which is still the core target recommended by us at present. we are firmly optimistic about the company's future development prospects. At present, the company has nearly 8.2 billion orders in hand and sufficient orders in hand. The company's net profit in 17-19 is expected to be 6.91 million, which corresponds to the valuation of 31X/20 X / 14 X and maintains a "buy" rating.