Main points of investment
Southern bearing released its report for the third quarter of 2016: the company's operating income in the first three quarters of 2016 was 234 million yuan, an increase of 2.06 percent over the same period last year, and the net profit belonging to shareholders of listed companies was 60.4608 million yuan, an increase of 7.52 percent over the same period last year.
Analysis of changes in financial data: in the first three quarters of 2016, the company achieved operating income of 234 million yuan, an increase of 2.06% over the same period last year, stable operation and steady growth of performance, and achieved a comprehensive gross profit margin of 37.63%, an increase of 3.23% over the same period last year. Mainly due to the improvement of the company's product structure, bearing products with high gross margin accounted for an increase in total sales.
Participate in Wuxi Yilong Aviation equipment Co., Ltd., cut into the field of aircraft tire remanufacturing. In July 2016, the company took a 36% stake in Wuxi pterosaur with its own capital of 58.7755 million yuan. Wuxi pterosaur is the only aircraft tire remanufacturer in China with continuous trial and supply capability. at present, it has obtained the remanufacturing qualification of 19 of all 23 parts of Boeing Co aircraft. Wuxi pterodactyl will set up a national high-speed tire remanufacturing production base in Changzhou, and strive to achieve a net profit of 500,000,000,50,000,000 yuan in 2016Universe 2018, which is expected to become a new profit growth point of the company.
Over-raise funds to invest in new product development to help the company upgrade its products. According to the market demand of the key mainframe and considering the comprehensive factors such as the enterprise's development strategy, the company decided to invest 23 million yuan in the "new energy automobile transmission bearing" project, 36.5 million yuan in the "high-end precision roller bearing" project, and 61.8 million yuan in the "auto parts piston" project, focusing on the development and production of high-end products such as high-precision, high-tech and high value-added needle roller bearings. The comprehensive annual return on investment of the project is expected to reach 21%, which is expected to bring an annual net profit of 25.5 million yuan for the company.
Valuation and rating: we are optimistic about the steady growth of the company's main business, as well as the participation in Wuxi pterodactyl to enjoy 10 billion Blue Ocean. It is estimated that the company's EPS for 2016-2018 will be 0.21 EPS 0.28 shock 0.42 yuan, corresponding to PE64x/48x/32x, will be given "overweight" rating.
Risk hint: the risk of unsuccessful M & A; the progress of production expansion is not as expected.
