Main points of the report
Event description
Falsen tracking report.
Event comment
Divestiture loss assets + factoring stable operation, high profit increase for the whole year: the company was originally the world's largest special medium and fine specification steel wire rope production base, mainly engaged in wire rope and other metal products production and sales. However, due to the relatively weak medium-and long-term development of the wire rope business, the company gradually divested the traditional loss-making steel wire rope assets and successfully acquired Moshan factoring to enter the field of financial financing services, which is expected to lead to rapid growth of the company's annual performance in 2016. Specifically, at the end of the third quarter of 2016, the company transferred the assets of three subsidiaries of special steel products, cable sales and metal products to the group, resulting in an increase of nearly 100 million yuan in investment income in the third quarter compared with the same period last year. Therefore, the wire rope asset transfer income has also become an important support for the annual performance to be significantly improved compared with the same period last year. In terms of factoring, with the continuous expansion of the scale of accounts receivable of industrial enterprises across the country, the demand for factoring financing has been gradually released under the background of traditional financing channels and relatively limited space. As the first asset securitization project company based on factoring financing claims in China, the service products are widely distributed in travel, environmental protection, film and television culture, car rental and retail and other industries. Therefore, in the context of the broad space of the commercial factoring industry, Moshan factoring has developed rapidly because of its certain comparative advantages. as of August 2016, Moshan factoring has issued a cumulative ABS of 1.713 billion yuan, and its operating income and gross profit in the first half of the year increased by 105.05% and 56.05% respectively compared with the same period last year, with a gross profit margin as high as 38.11%. Therefore, the sound operation of factoring is expected to become another source of high profit growth for the company for the whole year.
The main industry continues to be in the doldrums, and the transformation is worth looking forward to: even though the infrastructure areas such as the construction of major downstream bridges of steel wire ropes are relatively prosperous in recent years, the company's main business profits are still relatively weak, or it reflects the firm determination of the company to concentrate on transformation and upgrading. The company successfully acquired Moshan factoring in the first half of 2016 and increased its capital to Moshan factoring by 335 million yuan in July 2016, thus expanding the scale of high-quality financial assets and accelerating the transformation and financing service platform, demonstrating the company's strong desire to actively promote transformation and upgrading. In addition, the proportion of shares held by Jiangyin Yaobo, a subsidiary of Zhongzhi Group, which has diversified business, is up to 15%, which may open up a broad imagination for the company to break through and upgrade in the future.
It is estimated that the EPS in 2016 and 2017 will be 0.46 yuan and 0.51 yuan respectively, maintaining the "buy" rating.
Risk tips: 1. Industry demand fluctuated more than expected.