Main points of investment:
Annual results for 2015:
In 2015, the company had an operating income of 1.537 billion yuan, a gross profit of 356 million yuan and a gross profit margin of 23.2%. The net profit was 85.52 million yuan, down 23% from the same period last year. After deducting non-recurrent losses, the net profit is 163 million yuan, an increase of 8% over the same period last year, which is basically in line with our expectations.
Earnings per share are RMB15.8 cents, with a final dividend of HK2.6 cents and a full-year dividend of HK4.8 cents, with two bonus shares for every ten shares.
The company's main business has maintained steady growth, with a growth rate of about 8%. Among them, aroma and taste business sales of 976 million yuan, accounting for 64% of the total revenue, is the company's main business segment. The income of natural products is 283 million yuan, accounting for 18%. Special chemicals and other income 2.78, accounting for 18%. Sales of natural products increased by 24%, mainly due to the fact that Changtai Phase I transformation was put into production. The division's gross profit margin dropped from 23% in 2014 to 18.6%. This is due to the natural decline in the process of production expansion and the fluctuation of natural resources prices. In the future, the company will set up a natural resources procurement team to control the impact of natural resources price fluctuations on gross profit margins.
After the loss is calculated at one time, Zhongyi will re-develop with light packing:
In 2015, the company lost 28.47 million yuan in forward foreign currency contracts against the US dollar, 37.51 million yuan in exchange losses on US dollar loans, and 11.73 million yuan in legal and professional fees arising from the proposed acquisition. The company will calculate all the exchange losses at once, and the exchange risk will be kept to a minimum in the future. After adding all the gains and losses to the current 15-year statement, we think that future growth is expected.
Construction of the Goure project will begin in the second half of the year:
Affected by the explosion in Tianjin, the construction of Gu Lei chemical base has been postponed. Now the work of safety assessment and environmental assessment has been completed, the residents in the area have also been relocated, and construction can begin in the second half of the year.
M & An is still the focus of the company's extension development:
Zhongyi participated in a cross-border merger and acquisition project in 2015, the size of the project was as high as 1.5 billion US dollars, and a lot of manpower, material and financial resources were spent, but the acquisition was not successful. Although the company failed to participate in such a large-scale merger for the first time, it provided the company with valuable experience and the deepest understanding of the industry in its own development and future M & A projects. And upgrading to the downstream consumer side is also going on steadily, and the company's fragrance business is developing well.
Maintain a highly recommended rating:
We have always stressed that Zhongyi is not a traditional chemical industry and is not cyclical. despite the poor economic environment in 2015, the company's non-net interest rate remains at 11%. We continue to maintain a strong recommendation with a target price of HK $3.14, corresponding to 10 times PE in 2016, with a market capitalization of HK $1.7 billion.