Event description

Lianyungang announced its quarterly report for 2015 that the company's operating income in the first three quarters was 941 million, down 17.27% from the same period last year. Gross profit rose 2.16% year-on-year to 24.41%. Net profit belonging to the parent company was 44 million, down 45.68% from a year earlier. The EPS was 0.044 yuan. In the third quarter, the company's revenue fell 17.12% year-on-year to 314 million, gross profit margin rose 4.89 percentage points year-on-year to 25.59%, net profit attributed to the parent company fell 60.42% to 12 million, EPS was 0.012 yuan.

Event comment

The high elastic cost leads to the improvement of gross profit margin, and the deterioration of investment income drags down net profit. In the third quarter, the company's operating income fell 17.12% compared with the same period last year, and the gross profit margin increased by 4.89 percentage points to 25.59% compared with the same period last year, mainly because the decline in port throughput dragged down revenue, but the operating cost composed of fuel costs and external leasing services was more flexible than revenue, resulting in an improvement in gross profit margin. Finally, net profit in the third quarter fell 60.42% from a year earlier, significantly larger than the 37.38% decline in the first half of the year. Among them, investment income fell by 53.80% compared with the same period last year, contributing to nearly half of the decline in net profit. Under the fierce competition between ports and the trend of large shipping of mining transportation, the diversion of port throughput and the decrease of small and medium-sized ships berthed are the main reasons for the deterioration of subsidiary operation. The EPS of the first quarter to the third quarter is 0.01,0.02 and 0.01yuan respectively.

There was no significant improvement in revenue in the first three quarters. The company's operating income and costs fell 17.27% and 19.57% respectively in the first three quarters from a year earlier, with revenue decline basically in line with the 17.34% decline in the first half of the year, and gross profit margin slightly increased by 2.16 percentage points to 24.41%. At the same time, gross profit fell 23 million from a year earlier, while net profit fell 38 million (- 45.83 per cent) from a year earlier.

Container throughput is growing at a low speed. From January to September, the container throughput of New Oriental Education & Technology Group's container terminal, in which the company took a stake, fell 2.0 per cent from a year earlier, the same as the 2.0 per cent decline in the first half of the year, but a gap from the overall national growth rate of 4.9 per cent. Among them, the container throughput of New Oriental Education & Technology Group Container Terminal fell 2.0% in the third quarter compared with the same period last year.

Maintain the "overweight" rating. The highlights of the company mainly come from: 1) the local port integration will be completed during the establishment of Lianyungang Port holding Group Co., Ltd.; 2) the free trade zone negotiations between China, Japan and South Korea are back on track. We expect the company's EPS forecast for 2015-2017 to be 0.05,0.07 and 0.10 yuan respectively, maintaining the company's "overweight" rating.