The business situation is improving, and the new categories of air energy and water purification are growing rapidly.
Sunrise Oriental began to improve: 2016Q1's operating income and net profit rose 27 per cent and 38 per cent, respectively, compared with the same period last year.
The company actively promotes business transformation and upgrading, and the sales of new types of air-powered water heaters and water purifiers increased by 15% and 23% respectively in 2015. The company has sufficient capital reserves, it has a number of investment companies, extension expansion is worth looking forward to.
The deep adjustment of the solar and thermal industry in 2015 was a drag on income growth. 2016Q1 performance increased by 38% year on year. In 2015, the company achieved operating income of 2.59 billion yuan, YoY-14.9%; achieved a net profit of 270 million yuan, and YoY25.6%; achieved EPS0.34 yuan per share. Of this total, the company's 2015Q4 realized operating income of 780 million yuan and YoY-18.3%; achieved a net profit of 130 million yuan, turning a loss into a profit compared with the same period in 2014. The company's revenue declined in 2015 due to the deep adjustment of the solar water heater industry, while the increase in net profit was mainly due to the increase in gross profit margin and the low base caused by 2014Q4's impairment loss on long-term equity investment. The company's 2016Q1 achieved operating income of 500 million yuan, YoY26.6%; achieved a net profit of 44.54 million yuan, and the operating condition of YoY37.9%; began to improve with the narrowing of the industry decline.
The decline in raw material prices led to an increase in gross profit margin, and the net profit margin increased significantly. 3.3pct was affected by the low operation of raw material prices. The company achieved an overall gross profit margin of 38.3% in 2015, an increase of 2.3pct compared with 2014. Although the company's overall expense rate rose 7.4pct due to increased advertising investment in 2015, the increase in gross profit margin and the impairment loss on long-term equity investment in 2014 offset the upward impact of expense rate, and the company's profitability was improved. The company achieved a net interest rate of 10.4% in 2015, a significant increase in 3.3pct over 2014.
New categories of air energy water heaters and water purifiers become new revenue growth points. In 2015, the solar water heater industry was deeply adjusted, and the overall retail volume dropped sharply. Revenue from the company's traditional solar stand-alone water heaters fell 27.3% during the reporting period compared with 2014. The company adheres to the transformation and development strategy of "sunshine, air and water". In 2015, the sales revenue of air-powered water heaters and water purifiers reached 1.0 yuan and 220 million yuan respectively, an increase of 15.2% and 23.2% respectively over 2014. it has become a new revenue growth point for the company.
Sufficient capital reserves and epitaxial growth are worth looking forward to.
By the end of the first quarter of 2016, the company had a total of about 2.65 billion yuan in cash and other current assets, providing a solid guarantee for future business expansion. The company has many investment companies, such as Beijing Helios Investment Management, Shanghai Helios Investment, Tibet Haojing Investment, Chuanglan American Investment Holdings and so on. The company's future epitaxial growth is worth looking forward to.
Solar water heater industry leader, diversified business transformation and upgrading, maintain "increase" rating Sunrise Dongfang is the domestic solar water heater industry leader, actively to "light and heat, air energy, water purification" diversified business transformation and upgrading. The company has sufficient capital reserves, and its extension is worth looking forward to. It is estimated that the EPS of 2016-2018 will be 0.43 RMB 0.52 RMB per share. Taking into account the high growth potential of the water purification business, with reference to the comparable company's valuation, it is given a rating of 23-25 times PE in 2016, corresponding to a reasonable price range of 9.89-10.75 yuan.
Risk hint: macroeconomic downturn, water purification business expansion is not up to expectations.