Events:
The company released its third-quarter 2016 report that its operating income in the first half of the year was 554 million, up 47.53% from the same period last year. The net profit of shareholders belonging to listed companies was 125 million, an increase of 736% over the same period last year, and basic earnings per share was 0.27 yuan.
Main points of investment:
The rise in the prices of VB2 and VB6 contributed to a substantial increase in performance. The net profit in the third quarter was 68 million, surpassing the net profit in the first half of the year by 59 million. The sharp increase in performance was mainly due to the sharp rise in VB2 and VB6 prices and the decline in the price of raw material corn. At present, the VB2 price market transaction price is about 280yuan / kg, the main manufacturers are willing to increase the price in a limited amount, and the price is stable.
The transaction price of VB6 in the market is 240RMB / kg, and the price is stable. Although Huisheng (production VB6) has stopped production and maintenance for 3 months since July, the company has made production and sales arrangements and inventory preparation, and the suspension of production has no impact on the company's performance. At present, the price of new corn is 1600 yuan / ton, and the price of imported corn from Hong Kong is 1500 yuan / ton. the domestic corn price is expected to further decline and continue to increase gross profit margin.
With the acceleration of the reform of state-owned enterprises in Hubei Province, the company is expected to become the next object of the reform of state-owned enterprises in Hubei. With the gradual landing of the reform of state-owned enterprises in Hubei Province, Chutian Expressway, one of the listed platforms of State-owned assets Commission, issued shares M & An assets and employee stock ownership plan in August through the approval of the provincial SASAC, and Xiangyang bearing issued a reminder notice on the mixed reform of controlling shareholders in September. The company is the only listed company under the Changzhou Investment Group. When Changtou Group joined Guangji Pharmaceutical Co., Ltd., it promised that it would take Guangji Pharmaceutical Company's existing business and products as the core, actively invest in the development and growth of Guangji Pharmaceutical Company's existing business and products, and introduce new products appropriately. Changtou Group is expected to take advantage of this opportunity of state-owned enterprise reform to better play the role of the platform of Guangji Pharmaceutical listed companies. Guangji Pharmaceutical, which also belongs to the Provincial State-owned assets Supervision and Administration Commission, is expected to be strongly reformed.
Profit forecast and investment rating: the company's VB2 global production capacity accounts for more than 50%, the company currently adopts the policy of controlling price increases, other major manufacturers are willing to increase prices in limited quantities, VB2 prices are stable, and the performance is supported. At present, the company's market capitalization is about 5 billion, which is expected to benefit from the reform of state-owned enterprises in Hubei and further open the company's valuation space. We expect the company's EPS to be 1.07,1.17 and 2.00 yuan respectively from 2016 to 2018, maintaining a "buy" rating.
Risk hint: the price of vitamins is uncertain and the reform of state-owned enterprises is lower than expected.