SinoCom exceeded expectations and its continuity can be expected.
The company's operating income in the first half of 2016 was 3.288 billion yuan, an increase of 6.25 percent over the same period last year. The net profit attributed to shareholders of listed companies was 36.17 million yuan, up 53.11 percent from the same period last year. Compared with the same period last year, the net profit was 34.65 million yuan this year. The company's growth mainly comes from revenue projects from communications products and smart home appliances, with revenue up 116.6% year-on-year and gross profit margin up 2.75%. The main reason is a sharp increase in orders from Huawei and overseas customers. The company previously announced that Nuo intends to acquire mobile phone OEM manufacturer Xunrui Communications, which has an excellent position in the industry and will form a coordination between the upstream and downstream of the industrial chain with Zhongnuo. If the acquisition is completed, it will significantly enhance the competitiveness of the business. In addition, the share of trade income dropped from 60.3% in the same period last year to 37.5% in the current period. Its income structure is further optimized, and the proportion of businesses with strong profitability increases.
The LED industry is expected to reverse in the second half of the year, and business operation is expected to improve.
The company's LED assets mainly include Yuanlei Technology and Merry Optoelectronics, which achieved operating income of 160 million yuan and 66.68 million yuan respectively in the first half of the year, with a profit of 10.71 million yuan and a loss of 19.58 million yuan respectively. From the industry downstream leading enterprises to raise some product prices, LED price pressure is expected in the industry fierce reshuffle, the elimination of low-quality supply, gradually stabilized, ushered in a reversal. The company's LED business operation is expected to follow the improvement of the industry in half a year. And Yuanlei Technology still has 40 million performance commitments this year.
The loss-making baggage assets are expected to be stripped off and continue to optimize the structure.
The company's lighting, energy-saving and environmental protection assets show overall losses, which is a drag on the overall performance. The company will follow up or gradually clean up the baggage assets and optimize the structure. The company has previously announced that 35% of the shares in cross-strait lighting will be transferred to an unrelated third party of the information group and its subordinate enterprises. It shows that its asset optimization is being carried out actively.
Integrated circuits have been accumulated, or rely on the development of group companies
Fushun Microelectronics main 4, 6-inch IC chips, the first half of the year to achieve revenue of 69.68 million yuan. The company is the only integrated circuit listing platform of Fujian Electronic Information Group, which is an important joint venture partner of United Microelectronics Corp Xiamen Foundry. It has rich resources of integrated circuits on both sides of the Taiwan Strait, or is conducive to the further development of the company's integrated circuits.
Maintain a "buy" rating
It is estimated that the company's net profit for 16-18 years will be 286 million yuan for 201x249 and 0.66 for EPS 0.53, corresponding to 24X, 19x and 16X for 16-18, respectively, maintaining a "buy" rating.
Risk factors:
LED market recovery is not up to expectations, asset optimization is not up to expectations.