Main points of investment
Company news: the company released its annual results KuaiBao revealed that the annual operating income reached 4.05 billion yuan, down 10.1% from the same period last year, the operating profit loss was 130 million yuan, and the operating profit margin was-3.1%. The net profit belonging to shareholders of listed companies in 2016 was 29.73 million yuan, up 49.7% from the same period last year. In the fourth quarter, the company's sales revenue in a single quarter was 1.12 billion yuan, down 2.7% from the same period last year, and the net profit belonging to shareholders of listed companies was 11.26 million yuan, reversing losses compared with the same period last year.
Comments:
In the first half of the year, customer terminal demand was under pressure, and the volume of new products opened up room for growth: the company's sales revenue dropped by 10.1% in 2016, mainly due to competitive pressure in the LED chip market and lower product prices in the first half of the year, while the export-oriented small household appliance business fell by about 14% year-on-year due to political and economic instability in Europe and the United States, as well as changes in the company's customer structure. From the demand of the LED lighting market, the demand for the replacement of traditional energy-saving lamps continues, while the small spacing LED market forms an effective new demand for chip products, and the export business of small household appliances increases in terms of price competitiveness with the expectation of RMB depreciation, because we expect that the company's revenue will gradually resume growth in the future.
The increase in gross profit margin contributed to a significant reduction in operating profit: although the company's overall operating profit in 2016 was still at a loss, the loss was significantly lower than in the past three years (even after deducting the effect of one-time net assets in 2015). According to the information disclosed by the company, with the adjustment of product structure and effective measures of cost control, the gross profit margin has increased by about 2 percentage points compared with the same period last year, indicating that the efficiency of the company in operating business has been effectively improved.
LED and home appliance business industry gradually warmed up: in the LED product market, with the market competition slowed down in the second half of 2016, product prices stabilized, and at the beginning of 2017, major chip manufacturers all took measures to raise prices. After experiencing relatively fierce price competition, the industry market formed a relatively stable and balanced pattern, and there is a trend of gradual recovery. In terms of home appliance export processing business, with the stabilization and recovery of the European and American economies, the depreciation of the RMB exchange rate, and the gradual completion of the company's capacity relocation, the income scale of the related business will return to the normal level in the past. the future is expected to enter a period of steady development.
Investment advice: our company forecasts earnings per share of 0.02, 0.16 and 0.23 yuan per share from 2016 to 2018, respectively. The return on net assets is 0.5%, 3.9% and 5.4% respectively. The six-month target price is 6.90 yuan, which is equivalent to a dynamic price-to-earnings ratio of 328.6, 43.1 and 30.0 times from 2016 to 2018.
Risk tips: LED product price fluctuations; RMB exchange rate fluctuations affect corporate profits; changes and implementation of government subsidy policies.