Matter item

According to the company's three-quarter report, from January to September 2015, the company achieved a total operating income of 2.559 billion yuan, down 0.41% from the same period last year. The net profit of shareholders belonging to listed companies was 97 million yuan, a decrease of 38.07% compared with the same period last year.

Main points 1. Revenue fell slightly and gross profit margin rebounded.

During the reporting period, the company achieved a total operating income of 2.559 billion yuan, down 0.41% from the same period last year, mainly due to the economic downturn and the decline in market demand in the explosive industry; the company's comprehensive gross profit margin was 25.81%, down 3.69% from the same period last year. The main reason is that at the beginning of this year, the price liberalization of civil explosive products had a great impact on the industry, the price of civil explosive products declined, and profits shrank. However, in a single quarter, the gross profit margin in the third quarter was 27.16%, an increase of 2.19% over the previous quarter, mainly because the demand for civil explosion in Guizhou province was still good. At the end of the third quarter, the company reached a tacit understanding with Panjiang Minbao on sales strategy, and product prices rebounded somewhat.

two。 The performance is lower than expected and costs are expected to be cut.

During the reporting period, the net profit returned to the parent was 97 million yuan, down 38.07% from the same period last year, mainly due to a substantial increase in the expense rate. The company's expense rate in the third quarter was 25.45%, an increase of 2.32% over the same period last year, and an increase of 9.96% over the same period last year, of which the financial expense rate was 7.59%. The month-on-month increase of 3.42%; the management expense rate of 13.47%, an increase of 2.55% and 5.35% over the same period last year. At present, the company has a short-term loan of 1.334 billion yuan, and the financial expenses for the first three quarters are 142 million yuan, which is expected to reach 170 million yuan for the whole year. However, with the introduction of additional funds next year, the company's debt and financial expenses are expected to be greatly reduced.

3. The logic of long-term investment remains unchanged.

The core logic of Jiulian comes from the rapid growth of the profit side (domestic and foreign M & An integration) + the expected improvement of the valuation side (internationalization + integration + internal coordination of the group). According to the results we have followed for a long time, the promotion of various strategic objectives is in line with expectations.

4. Profit forecast and investment rating.

Jiulian has developed to a clear margin of safety (the high determination of the injection of civil explosive assets within the Poly Group and the higher-than-expected progress), and as the core strategy of the Poly Group and the positioning of the international first-class civil explosion giant within five years, the company's share price has a huge upward space. It is estimated that the EPS of the company in 2015-2017 is 0.43,0.98 (considering dilution) and 1.57 yuan respectively, corresponding to PE65X, 29x and 18x.

Risk tips: 1. The demand for civil explosions continues to decline; 2. Industry consolidation is not as expected.