This report is read as follows:
Dragged down by the decline in export business, the company's 2015 performance was slightly lower than we had expected, but the pace of transformation in the direction of health care accelerated, and the M & A fund built up strength for the company to enter the health care industry and maintain its "overweight" rating.
Main points of investment:
Maintain the "overweight" rating. With the decline of seamless clothing revenue, the company is speeding up the transformation of the medical and health industry to find growth points, and the layout of new industries is about to emerge. We maintain the company's 2016-18 EPS forecast of 0.36 pound 0.47pm 0.56 yuan, in view of the company's health care layout is expected to land, give a certain valuation premium, maintain the target price of 60.00 yuan, corresponding to 2017 128 times PE.
When the main business is in trouble, the gross profit margin increases. In 2015, the company achieved revenue of 330 million yuan (- 11.75%) and net profit of 36.23 million yuan (+ 7.38%), slightly lower than we had expected. 1) affected by the intensification of competition and the weakening of labor cost advantages, the company achieved 296 million yuan in export revenue in 2015, a year-on-year decline of 13.40% dragging down the main business. 2) in 2015, the company infiltrated the upstream industrial chain through a rights issue of 150 million yuan, reducing the cost of raw materials, and raising the gross profit margin by 1pct to 26.1%.
Capacity release, plans to build overseas production bases, the main industry is expected to improve. 1) the company will promote the construction of high-quality finishing production line in 2016, and further release upstream production capacity, and it is expected that revenue from the main business will resume growth in 2016. 2) the management has conducted research on Southeast Asia and other overseas markets. It will choose an opportunity to invest in seamless clothing production base in 2016, taking advantage of local labor costs and tax policies to transfer production capacity and reduce operating costs, and profitability is expected to increase in the future.
Set up Bang Jie Medical Investment Company to speed up the transformation of the medical and health industry. In June 2015, Bang Jie Co., Ltd. and Shangxin Capital jointly established 1 billion Medical Industry M & A Fund, which is involved in the field of health. In January 2016, the company set up 1.5 billion Industrial M & A Fund with Yinkang and Tianjin advantage Entrepreneurship to find high-quality medical targets in the field of medical services. With the help of the rich industry resources and investment experience of the partners, the company's layout in the medical industry is expected to be accelerated.
Risk tips: the transformation of the medical and health industry is not up to expectations, the main clothing industry has declined sharply, and so on.