Profit reversal, 20 times year-on-year increase in the fourth quarter

In 2015, the company achieved operating income of 10.075 billion yuan, an increase of 23.61% over the same period last year: the net profit belonging to the owner of the parent company was 12.5 million yuan, down 46.6% from the same period last year; and basic earnings per share was 0.04 yuan. In the fourth quarter, the company made a net profit of 54.15 million yuan, an increase of 1988% over the same period last year. The company plans to increase 20 shares for every 10 shares and hand out 0.13 yuan in cash (including tax).

The actual profit in 15 years exceeds 100 million, and the performance in 16 years is a foregone conclusion.

In 2015, the RMB depreciated by 6% against the US dollar, and the company lost 130 million yuan in exchange. If this effect is not taken into account, the actual net profit is about 110 million yuan, an increase of more than 300% over the same period last year. Lead processing fees rose from 1700 yuan / ton to 2700 yuan / ton in 2015 and to 2900 yuan / ton in January 2016. The lead smelting cost of the company is the lowest 20% in the industry, and the current complete cost is about 1900 yuan / ton. in the future, with the decline of financial expenses, the cost still has room for reduction of more than 200 yuan / ton. The company has a smelting capacity of 400000 tons. Based on this calculation, lead smelting will make a profit of about 400 million yuan in 2016. At present, the foreign processing fee is equivalent to more than 3000 yuan / ton, and we expect that the smelting processing fee will still be high in 16 years.

Seize the first machine cloth channel, the prospect of regenerated lead is bright.

In the next three years, a large number of small and medium-sized recycled lead enterprises in China will be eliminated due to environmental protection problems, and the number of enterprises is expected to be reduced from 200 to less than 10, which will benefit the company as an industry leader. Recycling channel is the core competitiveness of renewable resources enterprises, the company has decided to build a "waste lead-acid battery recycling network system", covering six provinces, build a national waste lead-acid battery recycling network, it is estimated that the recovery capacity will reach 720000 tons. In the future, China's recycled lead corresponds to a profitable market scale of more than 5 billion yuan, and the company is expected to gain more than 20% market share by virtue of technology and channel advantages, and the profit prospect is bright.

Give a "buy" rating

Considering the maximum dilution of equity (the increase will be completed in 16 years), we raise the EPS of the company for 16-18 years to 0.75,1.10,1.45 yuan. In view of the fact that the company's primary lead profitability has been reversed, 16 years of performance is a foregone conclusion, and the prospect of recycled lead business is bright. We continue to maintain the previous fair value of 20.50 yuan, corresponding to a 16-year PE of 27 times, given a "buy" rating.

Risk hint

Lead smelting processing fees fell, and the implementation of recycled lead environmental protection policy was lower than expected.