Main points of investment:
Matters: Abbott announced its results for the first three quarters of 2016, with revenue of 904 million yuan, an increase of 56.19% over the same period last year, net profit of 174 million yuan, an increase of 6.14% over the same period last year, and basic earnings per share of 0.2329 yuan. The company expects to return to its mother in 2016 with a net profit of 340 million to 430 million yuan, an increase of 27.73% to 61.54% over the same period last year.
The company's fourth-quarter results are expected to return to high growth. In the first three quarters of 2016, the company achieved operating income of 904 million yuan, an increase of 56.19% over the same period last year, and a net profit of 174 million yuan, an increase of 6.14% over the same period last year, close to the lower limit of the growth range disclosed by the China News. 16Q3 revenue was 439 million yuan, up 1.42% from the same period last year, and net profit from home was 100 million yuan, down 37.14% from the same period last year. The company expects to make a net profit of 340 million-430 million yuan in 2016, that is, the net profit of 16Q4 is about 166 million-236 million, an increase of 61.82% and 130.06% over the same period of 15Q4.
The scale of accounts receivable + inventory increases greatly, and there is a net outflow of operating cash flow. The company's income-to-cash ratio in the first three quarters was 31.34%, 4.51% lower than that of 16H1; the net operating cash flow was-205 million yuan, an increase over the same period last year, due to a relatively large increase in external procurement expenditure compared with the decline. As of September 30, 2016, the company's accounts receivable were 405 million, an increase of 122.32% over the beginning of the year, and inventory of 952 million yuan, an increase of 69.13% over the beginning of the year.
Both the composite gross profit margin and the net profit margin fell. In the first three quarters of 2016, the company's gross profit margin was 31.34%, down 12.65% from the same period last year. We believe that the decline in gross profit margin is mainly due to the gradual increase in the revenue share of the photovoltaic business with relatively low gross profits. assuming that based on the itemized business gross profit margin disclosed in the 2016 semi-annual report, it is estimated that the proportion of the company's metal roofing business and photovoltaic business revenue in the first three quarters is about 60:40. In the first three quarters of the company, the expense rate of the three items was 7.51%, with a drop of 0.33 percentage points, of which the management expense rate was 5.03%, with a decrease of 0.81 percentage points; the company's attributable net interest rate was also reduced by 9.05 percentage points to 19.21%.
With the gradual improvement of the layout of the industrial chain, new breakthroughs are expected to be made in overseas markets. Wholly-owned Sun Company Shenzhen Sanyi recently set up a Malaysian branch, which is expected to make new progress in overseas project development; sign a strategic cooperation agreement with Situang Electronics to speed up the promotion of intelligent building business; acquire 90% stake in Zhongwei Steel structure and Zhongwei Design, through the introduction of top design resources, greatly enhance the overall strength of the company's architectural design and management, and the layout of the industrial chain is becoming more and more perfect.
Profit forecast and valuation. The company is a scarce target specializing in metal roofing business, after the listing to solve the capital bottleneck ushered in a period of rapid development, the company's initial non-public offering after listing is only "suspension" rather than "termination", is expected to continue to move forward. We estimate that the EPS (not considering additional dilution) in 2016-2017 is 0.49 yuan and 0.64 yuan respectively, giving a 16-year valuation of 35-40 times, a reasonable value range of 17.30 yuan to 19.78 yuan, and a "buy" rating.
Risk hint. Payback risk, M & An integration risk.