Rongsheng Ultra Micro achieved operating income of 37.05 million in the first half of 2016, down 12% from the same period last year, and net profit of 4.43 million, up 342% from the same period last year. The company is the largest professional micro-enamelled wire production base in China. After the major shareholder changed ownership to Xianfeng Mining in 2014, the company actively transformed and increased its financial business to improve the company's profitability. The company is currently laying out commercial factoring, financial leasing, Guangdong-Hong Kong joint venture securities firms and commodity trading in many areas, financial control platform is emerging, the future is expected to continue to enter the banking, insurance license. Cover for the first time, giving a "prudent recommendation-A" rating.

The agreement to transfer the change of ownership of major shareholders will further enhance the control. The company is the largest production base of professional micro-enamelled wire in China, but in recent years, the market downturn has led to a decline in orders and demand, and the company's revenue and profits have declined compared with previous years. In April 2014, Xianfeng Mining was transferred to Yitao International and Zhuhai Science and Technology to become the largest shareholder. In 2015, the company announced a fixed increase plan to issue 142 million shares to Xianfeng Investment, Dacheng Innovation and Southern Capital. After the completion of the scheduled increase in April 2016, Xianfeng Mining holds a total of 40.06% of the company through its wholly-owned subsidiary Xianfeng Investment, which further enhances its control over the company.

The layout of a number of financial sectors, the thinking of transformation is gradually clear. 1) Business factoring: the company invests in Shenzhen Qianhai New District to set up Shenzhen Qianhai Yingshun Commercial factoring Co., Ltd., with a total investment of 300 million yuan. Take advantage of the policy advantages of Qianhai New area, such as many financing channels, low cost, quick approval of establishment, more follow-up policy innovation and so on. 2) Financial leasing: the company and Yamei Group jointly set up a financial leasing company in Hengqin, Zhuhai, with a capital contribution of 225 million yuan and a shareholding ratio of 75%. Xianfeng Mining, a major shareholder, is rich in mineral resources and is expected to carry out non-ferrous financial supply chain financial business in the future. 3) Guangdong-Hong Kong joint venture securities: the company plans to cooperate with Shangsheng Capital Management and Chuangsheng Capital Management to set up a joint venture securities company in Guangdong, in which the company holds 30% of the shares. With the help of the platform and resource advantages of Hong Kong shareholders, the company's participation in the establishment of a joint venture securities firm is an important step in the layout of the securities industry, which is conducive to promoting the transformation process of the company. 4) Commodity trading: in February 2016, the company transferred 41.5% of Hengqin International Commodity Trading Center held by Yi Fangda assets, and transferred 15% and 8% of Hengqin Investment from Zhuhai Financial Control Group and Da Hengqin Investment in April 2016. it currently holds a total of 64.5% of Hengqin International Commodity Trading Center. The company controls the commodity trading center and lays out the commodity trading, which is an important part of improving the company's transformation of the financial control platform.

Risk tip: the profit of the financial business is lower than expected.