Main points of investment
Revenue and profit are growing rapidly, and the company is expected to maintain a high growth rate in the first quarter: the company achieved operating income of 5.245 billion yuan in 2016, an increase of 42.44% over the same period last year, and its net profit was 472 million yuan, an increase of 69.0% over the same period last year (of which the net profit in the fourth quarter was 201 million yuan, up 119.3% from the same period last year, exceeding market expectations), EPS0.90 yuan, and the net cash flow generated by operating activities was 563 million yuan. The company expects to achieve a 30% year-on-year increase in net profit in the first quarter of 2017. At the same time, through the profit distribution plan, all shareholders distribute a cash dividend of 0.9 yuan for every 10 shares and increase 30 shares to all shareholders with capital accumulation fund.
Gross profit margin remained stable and expenses were well controlled during the period: the company's comprehensive gross profit margin in 2016 was 17.26%, down 0.19 pct from the same period last year, which remained basically stable. In terms of sub-business, the revenue of the company's new energy equipment and engineering, high-end power / data center and photovoltaic inverter reached 3.594 billion yuan, 1.348 billion yuan and 196 million yuan respectively, an increase of 52.87 percent over the same period last year, with a year-on-year increase of 33.14 percent and a gross profit margin of 9.88 percent, respectively, representing a change of 4.52 pct from a year earlier.
The company's sales expense rate / management expense rate / financial expense rate changed respectively in 2016-1.22 pct 0.11 pct. The overall expense rate decreased by 0.92 pct during the period, and the cost was well controlled during the period. Among them, the obvious decrease in the expense rate is mainly due to the lower sales expenses incurred by the photovoltaic system integration business and data center integration business, which increased significantly in 2016, while the company strengthened market control and reduced further sales expenses.
Benefit from the rapid installation of photovoltaic integration business has increased significantly, and the revenue of many projects is expected to increase significantly in the second half of the year: the 13th five-year Plan for electric power development points out that solar power generation should be installed above 105GW by the end of 2020, that is, the annual installed 12.36GW will be increased annually during the 13th five-year Plan period, and the installed CAGR of photovoltaic will be 19.4%.
Due to the rush installation effect, the newly installed 34.24GW in 2016 greatly exceeded the annual average. as the company gradually shifted its original inverter business to system integration, the company fully benefited from the photovoltaic rush installation market in 2016, with an annual revenue of 3.594 billion yuan for photovoltaic equipment and engineering, an increase of 52.87% over the same period last year.
At the same time, the company is also actively developing the operation of photovoltaic power stations. According to statistics, a total of 14 photovoltaic projects were connected to the grid in the whole year, with power generation revenue of 86.85 million yuan, a year-on-year increase of 376.7%. We believe that in the future, the strong cash flow of photovoltaic power sales will further help the company expand into more areas, and we are optimistic that the company will focus on developing photovoltaic construction and operation business in the central and eastern regions. In addition, the fixed increase project of 173MW distributed photovoltaic power station raised by the company has been issued, and the company still has 10 approved photovoltaic power station projects to be generated, both for sale and self-operation, which are expected to significantly boost the company's performance.
Transition to IDC integrators and operators to provide "one-stop" services: with the arrival of the information age, the booming IDC industry has more refined requirements for power supply. In the next few years, with the accelerated penetration of the government's "Internet +" policy into the industry and the rise of industries such as big data and cloud computing, consulting firm IDC expects China's IDC market to maintain a growth rate of more than 30%, approaching 140 billion yuan by 2018. The company is a leader in domestic UPS power supply, compared with foreign manufacturers, the company's products have cost advantages, and. At the same time, in recent years, the company strives to build the overall solution system of the data center and provide one-stop services. At present, the company provides relevant services for the government, banks and power grid, it is worth mentioning that the company's products and solutions have been successfully applied to Guangzhou Tencent, Guangzhou Baidu, Inc., Guangdong Mobile and other IDC projects, creating a brand effect.
In addition, the company has also achieved good results in the rail transit industry by using cost-effective products and sales resources. in 2016, the company won the bid for the first driverless subway project in the United States and the power supply project of Shenzhen Metro Line 11, which set a number of domestic records. and has achieved in Guangzhou, Dongguan, Ningbo, Hangzhou and other places, we expect this business to create a new growth point for the company's performance.
The charging pile is continuously catalyzed by the policy, and the company's charging pile business network is warming up: the Energy Bureau and the national network have a positive attitude, and exploring a reasonable commercial and subsidy model is expected to become a new direction of the charging pile market policy this year, which will ensure the rapid development of the charging pile market from top to bottom. The Energy Administration's annual target for the construction of rechargeable piles 900000 (public 100000, dedicated 800000), the national network plans to build rechargeable piles 29000 (year-on-year growth rate of 30%) and other plans continue to raise the market expectations of charging piles for the whole year.
As a manufacturer with core technology of independent charging module, the company's initial goal is to grasp both "charging pile equipment and investment operation". The company has cumulatively completed Dongguan New Energy vehicle promotion and application project and other intelligent charging stations for electric vehicles, and developed 300KW fast charging piles, which has accumulated rich experience. Due to market factors, the company's charging pile revenue in 2016 was only 13.344 million yuan, down 85.98% from the same period last year. We expect that the company's charging pile business will pick up with the rapid development of the market in the past 17 years.
Investment suggestion: we are optimistic about the transformation of photovoltaic business to system integration and operation, forming "equipment + engineering + operation".
The integrated development model, and actively optimistic about the development of the IDC industry and the steady development of power and rail transportation subdivision industries, looking forward to the gradual recovery of the company's charging pile business, while the microgrid technology and electricity sales business in cooperation with the State Grid Institute of Electrical Sciences are expected to provide the company with more profit growth points. It is estimated that 2017-2019EPS will be 1.03,1.27,1.53 yuan respectively (without considering the dilution of equity conversion), with a 12-month target price range of 46.50-47.2yuan.
Risk hint: competition in photovoltaic business intensifies, charging pile business is not as expected, and microgrid projects are not as expected.