Main points of the report
Event description
According to the company's annual report, the operating income in 2016 was 1.665 billion yuan, an increase of 9.64 percent over the same period last year. The net profit attributed to shareholders of listed companies was 90.83 million yuan, down 80.15 percent from the same period last year.
Q4's operating income and performance were 526 million yuan and 33.92 million yuan respectively, up 41.6% from the same period last year, turning losses into profits, basically in line with expectations.
Event comment
Stripping off the real estate industry, profits fell temporarily. The company is mainly engaged in the production and management of viscose fiber and tap water. The company currently has an annual production capacity of 148000 tons of viscose staple fiber and 20,000 tons of viscose filament rights and interests, and its comprehensive strength is in the forefront of its peers. The company engaged in both real estate development and sales before 2016, and publicly transferred its 70% stake in Nanjing Jinling Real Estate Development Co., Ltd. in 2015, achieving an one-time investment income of 498 million yuan, but there was no such income in 2016. Affected by this factor, the performance in 2016 decreased significantly compared with the same period last year.
The company's viscose staple fiber management is bright. In 2016, the company sold 82000 tons of viscose staple fiber, an increase of 10%, revenue of 969 million yuan, an increase of 24.2% over the same period last year, and a gross profit margin of 12.07%, an increase of 4.31% over the same period last year. Mainly benefit from the improvement of supply and demand of viscose staple fiber, the price continues to rise. In 2016, the average sales price of viscose staple fiber was 118,000 yuan / ton (excluding tax), up 13% from the same period last year.
Viscose staple fiber continues to be prosperous. Consumption upgrade, the amount of viscose staple fiber increased. The apparent consumption of viscose staple fiber in China in 2016 was 3.16 million tons, with a compound growth rate of 12% over a five-year period. The RMB depreciated and exports continued to expand. The export of viscose staple fiber reached 311000 tons in 2016, a growth rate of 43.8 percent, and is expected to continue to grow in 2017. On the supply side, the production capacity of viscose staple fiber was 3.74 million tons / year in 2016, there was basically no new production capacity in 2017, the operating rate was more than 90%, the inventory was only 2 days, and large manufacturers had abundant orders on hand. In March, some manufacturers stop production and maintenance, affecting the market supply, and every year March-May is the peak consumption season of viscose staple fiber, the price is expected to continue to rise. The current price is 174,000 yuan / ton, each increase of 1000 yuan / ton, the company's EPS thickening 0.31 yuan.
The company will benefit from the increase in the price of viscose filament. Viscose filament is used for clothing lining, decoration, etc. Consumption has improved, the industry has no new production capacity, and has gone through the downturn. Since December 2016, the price of 120D has increased by 3.4%, and the price is quoted at 39,000 yuan / ton. The price difference has widened, and the profit of the company's viscose filament has improved.
Maintain a "buy" rating. Viscose staple fiber continues to be in high prosperity, and the company has the greatest flexibility; under the background of state-owned enterprise reform, it is committed to the development of the second main industry and the transformation to emerging industries. The market capitalization is small, the flexibility is big.
It is estimated that the EPS of the company from 2017 to 2019 is 0.98,1.11,1.21 yuan.
Risk tips: 1. The risk of consumption downturn
two。 Market development risk.