The performance of China News is beautiful, and the industry is the wing of finance.
In the medium term, the net profit of shareholders of Junzheng Group was 630 million yuan, up 59.72% over the same period last year; operating income was 2.55 billion yuan, up 9.9% over the same period last year; and operating cost was 1.53 billion yuan, down 2.87% and 5.02%, or 0.87% less than the same period last year. The main business of the company, such as chlor-alkali chemical industry and ferrosilicon, accounts for 72.05% of the net profit of the parent company, while the investment income of the financial sector to Tianhong fund and Huatai insurance accounts for 27.95% of the net profit. Junzheng Group takes the industry as the round finance as the wing to promote the comprehensive and rapid development of the company's performance.
The results of capacity removal are remarkable, and the contribution of ferrosilicon performance is outstanding.
Under the background of supply-side reform in traditional industries, ferrosilicon industry takes the initiative to eliminate production capacity and eliminate backward production capacity, and supply and demand tend to be balanced. From the beginning of the year to the end of June this year, the demand for ferrosilicon increased, from 100000 tons at the beginning of the year to 190000 tons, while the market price of Wuhai ferrosilicon FeSi75-B also rose 9%. At the same time, under the company's "total cost leadership" strategy, the gross profit margin of ferrosilicon business reached 15.54%, 7.26 percentage points higher than at the beginning of the year. So far, the price of Wuhai ferrosilicon is still rising further, up 24% from the beginning of the year, and is expected to continue to contribute profits this year.
The integration of circular economy to reduce costs and maintain the competitiveness of the industry
The operating rate of the PVC industry in the first half of 2016 is about 70%, product prices have been hovering at a low level, and the situation of losses in the industry as a whole has not completely changed. However, with the improvement of the company's circular economy industrial chain, the self-sufficiency rate of raw materials and power supply has increased, the cost has dropped, and the gross profit margin of the main business has increased in an all-round way. Among them, the gross profit margin of polyvinyl chloride, tablet alkali and liquid alkali increased by 6.07%, 3.24% and 9.7% respectively compared with the beginning of the year.
Acquisition of Huatai Insurance, strategic layout of finance to enjoy investment income
In the first half of the year, the profits of Tianhong Fund and Huatai Insurance held by Junzheng Group contributed 176 million yuan, accounting for 27.95% of the net profit belonging to the parent company. Junzheng Group currently holds 15.2951 per cent of Huatai Insurance. After the approval of the transfer, it will hold 22.2698 per cent of Huatai Insurance, making it the largest shareholder of Huatai Insurance. The insurance industry is in an upward channel, and there is a huge room for stable income. The company also holds a 15.6% stake in Tianhong Fund, which is the third largest shareholder of the company and enjoys the development dividend of the fund industry. At the same time, the company also holds some shares in Wuhai Bank and Guodu Securities, enjoys synergy in the exchange of resources in various financial sub-fields, and supports the real industry to achieve the development of industry-finance integration.
Profit forecast and valuation
The company has the right to increase the price at 4.6 yuan per share, with a high margin of safety. Ferrosilicon is expected to maintain growth in the second half of the year, the traditional chemical gross profit margin is stable, after becoming the largest shareholder of Huatai Insurance to enjoy the contribution of insurance profits, Tianhong fund growth will slow down. It is estimated that the EPS after removal in 2016, 2017 and 2018 will reach 0.15,0.17,0.19 yuan respectively, corresponding to 32,28,24 respectively. Combined with the valuation range of ferrosilicon, chemical industry and insurance industry, the resource advantage and circular industry chain of chlor-alkali chemical industry of Junzheng Group, and the development space of Huatai Insurance, give Junzheng Group 35-37 times the valuation of Pmax E. According to the reasonable price range calculated by EPS after excluding rights, the reasonable price range is 5.3yuan-5.6yuan, maintaining the overweight rating.
Risk hint: the chemical industry continues to have serious overcapacity, and the investment income has declined sharply and the insurance profit has been hindered.