Event

2015 Annual report released

Ored's operating income in 2015 was 1.15 billion yuan, an increase of 86% over the same period last year. The net profit of shareholders belonging to listed companies was 300 million yuan, an increase of 128% over the same period last year, exceeding the promised performance of 21.81 million yuan.

Brief comment

Beyond performance commitment, product structure change

Compared with last year, the company's product structure has undergone great changes. The revenue of the single crystal furnace reached 556 million yuan, an increase of 341.5% over the same period last year, accounting for 53% of the total revenue, making it the company's largest source of income. The sapphire crystal business, which is mainly used in consumer windows, also surpassed the crystal bar business to become the second largest product, with revenue of 242 million, an increase of 173.4% over the same period last year.

Transition to a comprehensive solution provider of "equipment + process"

The sale of 2000 single crystal furnaces to the joint venture Inner Mongolia Jinao Optoelectronics marks the company's business structure from sapphire crystal sales to sapphire crystal "equipment + process" integrated solution provider, the share of equipment sales and related services will increase significantly in 16 years. Making full use of the advantage of electricity price in Inner Mongolia will have a significant impact on the domestic sapphire production capacity layout and prepare for future consumer electronics applications.

Profit forecast and valuation

Taking into account the impact of orders for single crystal furnace in Inner Mongolia, we adjust the company's EPS forecast to 1.04,1.39 and 1.61 in 2016-2018. The current stock price corresponds to 28X, 21X and 18X PE in 2016-2018. The target price is 49.6 yuan, corresponding to a PEG of 0.28 in 2016, maintaining a "buy" rating.