Brief comment on performance
In the first three quarters of 2015, the company achieved operating income of 1.669 billion yuan, an increase of 11.59% over the same period last year. The net profit attributed to shareholders of listed companies was 154 million yuan, an increase of 149.41% over the same period last year.
Business analysis
Business performance has improved steadily. During the reporting period, the company's operating performance continued to improve, with revenue growth of 11.6% and profit growth of 149%. The main reason for the performance improvement is that the company's integration of Gonggong Europe and other subsidiaries has enhanced the synergy and improved the economic benefits. Shanggong European platform integrates the three major brands of Duke Pu Aihua, Baifu and KSL have strong competitiveness in the middle and high-end field of sewing equipment.
Increase capital holding Shensi logistics to expand the source of profits. During the reporting period, the company increased its capital to control Shensi Logistics (holding 40%), promoted the development of the company's e-commerce, modern logistics and other businesses, cultivated new profit growth points, and reduced the operational risks caused by the over-concentration of sewing business. The inclusion of Shensi Logistics in the scope of consolidated statements is also another important factor in improving the company's performance.
Profit adjustment
We forecast that the company's main business income from 2015 to 2017 will be 2.234 billion yuan, 2.614 billion yuan and 2.898 billion yuan respectively, an increase of 13.3%, 17.0% and 10.9% respectively over the same period last year; and the net profit of 217 million yuan, 269 million yuan and 319 million yuan respectively, up 9.74%, 24.26% and 18.45% respectively over the same period last year.
Investment suggestion
The company's current stock price (2015 Universe 11 PE closing price: 15.62) is 32 times higher than that of 2015 Universe 2016. We believe that the company's business integration in Europe has achieved good results and its performance has entered a healthy growth period. the company has mastered the automation technology of high-end sewing equipment and has a leading advantage in domestic demand adjustment and product automation update. and directly benefit from the Pudong state-owned enterprise reform, combined with the current stock price valuation level, maintain the company's "buy" rating, 6-month target price of 20 yuan.
Risk
The risk of further integration of Shanggong's European business; the risk of declining demand in the downstream clothing industry; and the risk of business expansion in new areas such as aerospace.