Main points of investment
The company announced its third-quarter results, with revenue of 783 million yuan during the reporting period, an increase of 32.74% over the same period last year, an operating profit of 185 million yuan, an increase of 26.8% over the same period last year, and a net profit of 152 million yuan belonging to the parent company, an increase of 29.3% over the same period last year. The performance greatly exceeded expectations, with an EPS of 0.13 yuan.
The rise in price and volume is the main reason for the company's better-than-expected performance. The company realized revenue of 295 million yuan in the third quarter, a year-on-year increase of 57%, a gross profit margin of 50.8%, a month-on-month increase of nearly 20% over the second quarter, an operating profit of 108 million yuan, a year-on-year increase of 2.84%, a month-on-month increase of 72.5%, a net profit of 90.44 million yuan, a year-on-year increase of 3.02%, a net profit of 90.81 million yuan belonging to the parent company, a three-fold increase over the same period last year, and EPS0.08 yuan in a single quarter. The simultaneous increase in the price and volume of the company's products is the main reason for the higher-than-expected results in the third quarter: (1) lead and zinc prices continued to pick up in the third quarter, with lead and zinc prices rising by 5.76% and 15.36% respectively from the previous quarter, with average prices reaching 138,000 yuan / ton and 179,000 yuan / ton respectively. The price shows that the warming has led to a substantial increase in the profitability of the company's products. (2) sales increased sharply in the third quarter: lead and zinc sales in the third quarter were 2617 tons and 22200 tons respectively, an increase of 8 times and 97.7% respectively. The increase in the company's production, sales and prices is the main factor for the company's better-than-expected performance in the third quarter.
Give the company an "overweight" rating. We expect the company's net profit for 2016-2018 to be 2.58,2.91 and 332 million yuan respectively, and EPS 0.23,0.26 and 0.29 yuan respectively. Considering the continued recovery in lead and zinc prices, the company will fully benefit. At the same time, the group asset injection expectation is strong, and the "overweight" rating is given for the first time.
Risk tips: lead and zinc price volatility risk; group debt risk; asset injection lower than expected risk.