Event description

Lianyungang achieved operating income of 1.243 billion in 2015, down 18.73% from the same period last year, gross profit increased 2.78% year-on-year to 24.22%, net profit attributed to the parent company fell 48.55% to 53 million yuan, EPS was 0.05yuan, and 0.10 yuan in 2014. Profit distribution plan: 0.2 yuan for every 10 shares (including tax).

Event comment

Gross profit margin improved slightly and net profit growth was hampered. In 2015, the company's operating income was dragged down by the decline in throughput (- 24.20%), down 18.73% from the same period last year; gross profit margin rose 2.8 percentage points to 24.22% due to the company's operating cost drop (- 21.61%), which mainly benefited from the sharp reduction in staff salaries and rental expenses. In the end, the company's vested net profit fell by 48.55% compared with the same period last year, mainly due to: 1) the company's gross profit decreased by 27 million; 2) due to the influence of large-scale ships, the number of ships suitable for loading and unloading of the new land bridge wharf decreased by 19 million; 3) the government returned the company's cargo port fees by 28 million.

Fourth-quarter results continued to weaken. In the fourth quarter alone, the company's operating income was 302 million yuan, down 23.0% from the same period last year, and the attributable net profit was 58.9% lower than the same period last year. The operating results of the company in the fourth quarter continued to be weaker than those in the previous three quarters, with the corresponding EPS of 0.01,0.02,0.01 yuan respectively in the first and third quarters.

The upstream demand is insufficient and the throughput has dropped by 20%. In 2015, the company completed cargo throughput of 46.86 million tons, down 24.10% from the same period last year. Among them, the throughput of iron ore was basically the same as the same period last year, while the throughput of iron and steel increased by 18.3% supported by upstream steel mills. The decline in throughput was mainly due to the decline in the throughput of nickel laterite, coal and coke, which fell by 69.68%, 39.30% and 34.88%, respectively. Affected by this, the revenue from the company's loading and unloading business and storage business decreased by 23.12% and 17.53% respectively.

Release the performance risk and maintain the "overweight" rating. Considering that the operation of port enterprises is obviously affected by the economic environment, the performance risk of the company in 2015 has been released, and the bright spot of the company in the future will come from:

1) the local port integration will be completed during the establishment of Lianyungang Port holding Group Co., Ltd.; 2) the negotiations on the free trade zone between China, Japan and South Korea will be gradually advanced, and if finally finalized in the later stage, it will be beneficial to the handling of port cargo.

We estimate that the company's EPS from 2016 to 2018 will be 0.06 yuan, 0.08 yuan and 0.10 yuan respectively, maintaining its "overweight" rating.

Risk tips: continuous deterioration of throughput and port emergencies