Performance review
Performance is in line with expectations
Longji Machinery released its 2015 annual report, with an annual operating income of 1.39 billion yuan, an increase of 12% over the same period last year, and a net profit of 55.53 million vested, an increase of 22% over the same period last year. In line with the performance of KuaiBao and our previous expectations.
Trend of development
The rebound of 4Q gross profit is accompanied by a large provision for impairment of assets. The gross profit of 4Q company reached 18.4%, an increase of 1.51,5.2 points compared with the same period. Due to prudent accounting principles, 4Q recorded an one-time impairment loss of 6.87 million, and the total impairment loss for the whole year was as high as 13.69 million, an increase of 291% compared with the same period last year, reaching the highest value in history. Benefiting from the devaluation of the RMB, the company achieved an exchange gain of 1860 million for the whole year, which offset the two, which had little impact on the performance.
Benefiting from the devaluation of the RMB, the share of exports has further increased. In 2015, the company's domestic revenue shrank slightly by 1.95%, while export revenue increased by 21.4% to 896 million, accounting for 64.6% from 59.6% in 2014, becoming the main growth driver of the company. As the gross margin of the export business is higher than that of the domestic business, the increase in the share of exports has cushioned the decline in the overall gross margin to some extent.
Break the bottleneck of production capacity and increase the market layout after increasing the holdings of Shanghai cars. During the performance period, the company's 35000-ton automobile brake disc and 800000 sets of brake pliers were successfully put into production, the capacity bottleneck has been broken through, and the cash cow status of the brake disc has been further strengthened. In addition, the company increased its stake in Shanghai che Yi by 10% with 12 million, accounting for 37.09% of the total. By investing in Auto Exchange, the company cuts into the C2b2B chain in the automotive aftermarket to achieve transformation. However, as the Che Yi net is still in the market promotion period, it has not yet achieved a turnaround.
Profit forecast
Considering that Che Yi net has not yet reversed its losses, we have lowered its net profit forecast for 2016 and 2017 by 17.1% to 64 million / 71 million.
Valuation and suggestion
Taking into account the rights issue of the company, we accordingly adjust the target price from-23% to 17 yuan (10 to 3), corresponding to the diluted 100x Pmax E in 2016, maintaining a neutral rating.
Risk
Che Yi net continues to lose money.