Main points of the report

Event description

Hartech (600095) announced today the 2015 annual report, the main contents are as follows: the company realized operating income of 265 million yuan, down 39.88% from the same period last year, net profit of 14.5772 million yuan, an increase of 25.90% over the same period last year, and net profit margin of 5.51%, up 2.88% from the same period last year, EPS0.04 yuan. Among them, the operating income in the fourth quarter was 104 million yuan, an increase of 38.01% over the same period last year, the net profit was 25 million yuan, an increase of 576.28% over the same period last year, and the net profit margin was 23.93%, up 19.05% from the same period last year, EPS0.07 yuan.

Event comment

The main businesses are dull, revenue declines and profits pick up. The company's 2015 operating income decreased by 39.88% compared with the same period last year, and its net profit increased by 25.90% year-on-year. The company's revenue decline is due to a certain decline in revenue from businesses such as real estate, pharmaceuticals and roll-proof materials compared with the previous year; the company's net profit has increased significantly this year, mainly due to a reduction of 20.06 million yuan in asset impairment losses caused by the company's recovery of receivables in 2015. Another main reason is that the subsidiary Qingdao Lingang Real Estate received a government construction land attachment removal award of 19.76 million yuan.

The level of debt is low and there is more room for capital operation. The company's current period to strengthen the return of funds, resulting in plenty of cash, leaving more room for the company's capital operation. At the end of the reporting period, the company's asset-liability ratio was 34%, the lowest level in recent years, and the net debt ratio was low, only 4%.

The pharmaceutical industry has a stable performance and increased resistance to the real estate cycle. In 2015, the net profit of White Swan Pharmaceutical, a subsidiary company, increased by 3.62 million yuan while its operating income decreased compared with last year, mainly due to the growth of thymosin enteric net profit of the dominant variety with higher gross profit margin for four consecutive years. The pharmaceutical industry accounted for 23.41% of total revenue in 2015, with a steady increase in net profit, strengthening the company's resistance to the real estate cycle.

Continue to increase the size of new energy, waiting for the transformation to rise abruptly based on accumulated strength. During the reporting period, the company made continuous actions in the new energy business. At the beginning of June, it provided 61.38 million yuan of financial assistance to Puni Company, and in early November the company issued a fixed increase plan to raise 1 billion yuan, of which 500 million will be invested in the design, consultation and construction of photovoltaic power station. With the continuous fermentation of the new energy macro policy and the gradual improvement of the Pune solar energy production line, the new energy business is expected to become a new growth point of the company.

Investment advice: mediocre performance in 2015 and optimistic about improvement in 2016. Considering that it is difficult to determine the cashing time of the new business performance, according to the existing traditional business operation, we expect the EPS to be 0.044 yuan per share in 2016 and 0.054 yuan per share in 2017, and the previous share price PE is 203.40 and 167.32 times, covering for the first time and giving the "overweight" rating.

Risk hint: pharmaceutical industry regulation tightened, fixed increase plan blocked