What happened: the company recently released its annual report for 2015 and a forecast for the first quarter of 2016. In 2015, the company's revenue was about 350 million yuan, down 19.23% from the same period last year; the net profit from its mother was about 4.62 million yuan, down 76.08% from the same period last year; and EPS was about 0.02 yuan per share. Among them, the income realized in the fourth quarter was about 94.63 million yuan, down 8.88% from the same period last year; the net profit returned to the mother was about-3.93 million yuan, down 289.72% from the same period last year. The company plans to pay out 0.02 yuan (including tax) for every 10 shares. The company estimates that the net profit of returning home in the first quarter of 2016 is about 29-2.05 million yuan, down about 95% and 65% from the same period last year.
Comments:
Traditional business continues to be under pressure. In 2015, the company's core business security glass achieved revenue of about 215 million yuan, down about 26.37% from the same period last year; revenue in the second half of the year was about 80.58 million yuan, down 46.78% from the same period last year, which was significantly expanded, mainly due to the postponement of the implementation of large-scale downstream projects. The annual gross profit margin of the company's security glass is about 39.4%, an increase of about 1.3 percentage points over the same period last year; in the second half of the year, the gross profit margin is about 39.8%, which is basically the same as the same period last year.
The fireproof profiles of steel doors and windows performed slightly better, and photovoltaic glass continued to decline. In 2015, the company's revenue from fireproof profiles of steel doors and windows was about 81.25 million yuan, a decrease of about 4.49% over the same period last year, with a gross profit margin of about 37.0%, an increase of about 8.1% over the same period last year. There is a serious overcapacity in the photovoltaic industry. Due to intensified competition, the company's photovoltaic glass achieved an annual income of about 4.18 million yuan, a decrease of about 57.6% over the same period last year, and the gross profit level lost money for three consecutive years.
The transformation of CDN, strategic planning to VR and other areas. The company has announced that it has issued shares to acquire 100% of the shares of OMG in Singapore at a price of about 3 billion yuan per share, with a share issue price of 14.53 yuan per share for Luo Weiguang and Narendra Fund, etc.; at the same time, it has raised about 600 million yuan from Luo Weiguang and others at a price of 20.14 yuan per share to invest in the construction of WIFI hot spots, virtual reality and augmented reality, big data analysis, etc.
After the acquisition of OMG, the company's profits will be boosted and sustained growth should be expected. OMG develops end-to-end OTT solutions tailored to the needs of network video operators, with profit commitments of $4500, $5000 and $55 million for 2016-2018, respectively. OMG's current customers are mainly in Southeast Asia, with an important contract value of about US $55.4 million by the end of October 2015. In the follow-up, the value of innovative technology should be brought into full play while consolidating its overseas dominant position and expanding the domestic market at the same time.
The actual controller of the company has been changed to Luo Weiguang, and the diversification strategy can be promoted. At present, Luo Weiguang has been transferred about 11.24% of the shares in the company (the average transfer price is about 21.08 yuan / share), becoming the largest shareholder and actual controller; after the completion of asset acquisition and supporting fund-raising, Luo Weiguang and his Narendra Fund will hold about 29.3% of the company, which is expected to add impetus to the smooth progress of the follow-up company's diversification strategy.
Maintain a "buy" rating. The company vigorously promotes the transformation and upgrading to the Internet, and the launch of the concept of VR is worth looking forward to; at the same time, the change of ownership structure is conducive to the promotion of the company's diversification strategy. After the completion of asset acquisition and supporting fund-raising, it is estimated that the company's EPS (fully diluted) in 2016-2018 is about 0.66,0.73,0.81 yuan per share, respectively. Considering the company's future expansion expectations in hot areas such as VR, the company will be given PE (corresponding to fully diluted EPS) 45 times in 2016, with a target price of 29.70 yuan per share.
Risk hint: the company's diversification to the Internet falls short of expectations; OMG's profits fall short of expectations.