The industrial sector is about to rebound growth: the company's actual control is Zhuhai SASAC, which has formed a two-wheel-driven business layout of industry and investment. The industry mainly includes: electronic equipment manufacturing, electronic device manufacturing and sewage treatment business, and the investment is mainly equity. The company's industrial sector has been lukewarm before, but since 2015, with the increase of corporate support and the high growth of the lithium industry, business has bottomed out. For the whole year, operating income increased by 22.9% over last year, and net profit increased by 19.75%. We judge that the company's operating inflection point has passed and will enter the upward channel in the future.
Leading products establish the status of lithium power equipment industry, and are expected to maintain high growth in the future: Huaguan Electronics, a subsidiary of Huaguan Electronics, is mainly engaged in the manufacture of lithium power equipment and capacitor production equipment, supplying customers such as Guangyu, Lishen, Bic and other first-line power lithium battery manufacturers. In the past 15 years, a new type of highly competitive square winding machine and cylindrical winding all-in-one machine was put into the market, and its revenue and profit increased by 200% and 107% respectively compared with the same period last year, and won the Jinding Award of "Top Ten equipment Brands of China Power Battery in 2015". In the future, the company will seize the opportunity of downstream power lithium battery production expansion, take the winding machine as the main product, and continue to expand the scale of production and market. in addition, if the company successfully lands on the new third board (the company announces that it has started the relevant work, the restructuring will be completed in April this year), will further enhance brand awareness and capital strength, we judge that the company's lithium equipment business will continue to grow at a high speed.
The diversified layout of investment business is shaped with great potential: with the help of the comprehensive business layout and professional advantages of the parent company Zhuhai Financial Holdings in the financial field, the company has seized the spring tide of innovation and entrepreneurship in recent years, vigorously promoted the development of investment business, and successively set up several investment subsidiaries, such as Huaying Investment, Zhuhai Huajin Innovation Investment Co., Ltd., Zhuhai Huajin Asset Management Co., Ltd., and initiated the establishment of a number of PE funds. Formed the core platform and business system such as investment, asset management, incubator and so on. The investment project is expected to begin to withdraw in two years' time, which will effectively boost the overall performance of the company.
Investment advice: buy-An investment rating, 6-month target price of 22.00 yuan. We expect the company's net profit to grow by 24.0%, 22.4% and 25.9% respectively from 2016 to 2018, giving the Buy-An investment rating for the first time, corresponding to EPS:0.14 yuan, 0.17 yuan and 0.21 yuan.
Risk hint: downstream demand for lithium battery slows down, equity investment falls short of expectations
