Main points of investment
Event: the company issued a performance forecast for 2016, and during the reporting period, the net profit attributed to shareholders of listed companies increased by about 65%, or between 115 million yuan and 135 million yuan, compared with the same period last year.
Event comments: the projected return net profit of the company slightly exceeded our previous forecast (107 million yuan, 55% growth rate), mainly due to the completion of the delivery of the company's major asset purchases, and the profit of the target company in the fourth quarter of 2016 exceeded our expectations. the financial statements are included in the scope of the consolidated report.
With a large investment in the rail transit industry, the company has ushered in opportunities: the railway fixed assets investment in the 13th five-year Plan will reach more than 3.5 trillion yuan, which is significantly higher than the 2.8 trillion yuan investment in the 12th five-year Plan, of which about 3 trillion yuan will be invested in capital construction. build 30,000 kilometers of new lines. The company's business is in the field of rail transit, and the future strategy will focus on the development of urban rail transit business, while the central government encourages private enterprises to invest in construction, which is good for the company's future bidding and brings opportunities for the company's rapid development in the next five years.
With the rapid growth of orders, it is confirmed that the revenue peak is approaching: the company's three quarterly reports in 2016 revealed that the total amount of contracts executed was about 2.06 billion yuan, of which the domestic contract was about 1.05 billion yuan. The company is in an industry with a long delivery cycle, and about a year and a half of products begin to recognize revenue one after another. The number of contracts executed by the company has increased significantly since the second quarter of 2015, from 665 million yuan in the first quarter to 908 million yuan in the second quarter, the largest increase in a single quarter in recent years. It can be predicted that the company will enter the peak period of recognized revenue.
With the completion of M & A, the synergy effect is about to be reflected: the company has completed the merger and acquisition of Baofu in Germany and has the catenary business of RPS, which enables the company to achieve the leap covered by both primary and secondary equipment. Under the background of preference for integrators and comprehensive solution suppliers in the field of rail transit, it is helpful for the company to obtain orders. In addition, the company will continue to restructure the organizational structure of RPS, reduce costs, and realize the complementary effect of the introduction of high-quality foreign products into the Chinese market and the overseas development of domestic high-quality business through RPS.
Profit forecast and investment suggestion: we raise the company's profit forecast accordingly. It is estimated that the EPS of the company from 2016 to 2018 is 0.45,0.55 and 0.74 yuan respectively, and the corresponding PE is 37 times, 30 times and 23 times respectively.
We are optimistic about the layout of the company in the field of rail transit, and believe that the company can achieve complementary development of business at home and abroad through RPS and maintain the "buy" rating.
Risk hints: the risk that the progress of rail transit construction may fall short of expectations, the risk that the labor costs of overseas business cannot be reduced, the risk that the performance of M & An enterprises may be less than expected, and the risk of exchange rate.
