Reduce costs and improve profitability
Since the beginning of 2016, lead and zinc concentrate processing fees have been falling, and the company's profit pressure has been rising, but the company has paid close attention to cost management and successfully turned losses into profits. The lead concentrate processing fee dropped from 2700 yuan / ton at the beginning of the year (domestic TC) to the current 1800 yuan / ton, a drop of 33%, and the electric lead processing fee decreased by 10.8% compared with the same period last year; zinc concentrate processing fee dropped from 5350 yuan / ton (domestic TC) at the beginning of the year to 4800 yuan / ton at present, a decrease of 10%, and the zinc precipitation processing fee decreased by 4% compared with the same period last year. In the face of unfavorable situation, the company pays close attention to cost control, and transportation expenses, sales expenses, management expenses and financial expenses have all decreased compared with the same period last year. The net profit of the shareholders belonging to the listed company in half a year turns from loss to profit. It is expected that the future reduction in processing fees is limited, but there is still room for cost reduction, and profitability will continue to improve.
The gross profit margin of the main business has increased and will return to the normal level in the future.
In the first half of the year, the gross profit margin of the company's main business was 5.26%, an increase of 1.33 percentage points over the same period last year. Among them, the gross profit margin of zinc products decreased by 1.37 percentage points compared with the same period last year, mainly due to the zinc dialing price difference and the decrease of precipitated zinc production compared with the same period last year; the gross profit margin of lead products increased by 11.1 percentage points compared with the same period last year, mainly because the lead plucking price difference increased and the product processing fee decreased; the gross profit margin of rare and precious products increased by 10.54 percentage points compared with the same period last year, mainly because the processing cost of silver products decreased. We believe that in the future, the processing fees of the company's main products will remain stable, the recovery rate will be further increased, and the gross profit margin of the main products will return to the normal level.
Minmetals Group's listed companies have expectations for the reform of state-owned enterprises
The company belongs to Minmetals Group, and the reform of state-owned enterprises is expected to be great. With the SASAC announcing that "the current pilot reform of state-owned enterprises has been rolled out in an all-round way", the restructuring of major central enterprises has been carried out continuously. Minmetals Group's Jinrui Technology (now * ST Jinrui) has taken the lead in implementing asset injection. Zhuye Group, another company listed in Hunan by Minmetals Group, has poor performance in the past few years due to insufficient demand for metals and is expected to participate in the reform of state-owned enterprises.
Investment suggestion
According to our judgment on the future development of the company and the industry, the EPS from 2016 to 2018 is expected to be 0.04,0.12,0.23, corresponding to PE 258,91,46, given a "cautious recommendation" rating.
Risk Tips:
The processing fee continues to decline and the output falls short of expectations.
