Event description

Falsheng released three quarterly results, the company's operating income in the first three quarters was 1.568 billion yuan, up 22.47% from the same period last year; operating costs were 1.333 billion yuan, up 27.70% from the same period last year; and the net profit attributed to the parent company was 136 million yuan, up 145.96% from the same period last year, and EPS was 0.36 yuan.

In the third quarter, the company achieved operating income of 624 million yuan, up 38.88% from the same period last year; operating cost was 551 million yuan, up 52.03% from the same period last year; the net profit attributed to the parent company in the third quarter was 97 million yuan, up 338.50% from the same period last year; EPS was 0.25yuan in the third quarter, and EPS was 0.06yuan in the same period last year.

Event comment

The loss-making iron and steel assets were divested, and the profit in the third quarter improved significantly compared with the same period last year: on the basis of the traditional wire rope main business, the company gradually divested the traditional loss-making assets (including special steel products, cable sales and metal products). In order to achieve a light business pattern. At the same time, through the acquisition of Moshan factoring, the company hopes to expand its financial business with good profit prospects and lay a solid foundation for comprehensive transformation and building a high-quality financing service platform. Specifically, the company's third-quarter performance improved significantly compared with the same period last year, mainly due to the gains from the transfer of loss-making steel assets: the company completed the divestiture of shares in Special Steel products Company, Metal products Company and Metal Cable sales Company on September 29, 2016, resulting in an additional investment income of 101 million yuan in the third quarter, which became the main factor for the company's profit improvement in the third quarter compared with the same period last year.

Introducing strategic shareholders to help the financing business advance steadily: resources and capital are the core competitiveness of financing business. Taking factoring as an example, on the one hand, the resource advantage with a wide range of business tentacles is the guarantee of the quantity and quality of factoring business; on the other hand, capital advantage can alleviate the degree of factoring scale bound by regulatory leverage and break through the bottleneck of profit model over-reliance on financing channels. Today, Jiangyin Yaobo, a subsidiary of Zhongzhi Group, owns as much as 15%, which may indicate that it has certain expectations for Farsheng's future business planning.

It is estimated that the EPS in 2016 and 2017 will be 0.46 yuan and 0.51 yuan respectively, maintaining the "buy" rating.