Investment highlights:
Performance increased sharply in the first half of the year
The company announced its semi-annual report. It achieved operating income of 444,464,900 yuan in the first half of 2015, an increase of 24.39% over the previous year; total profit of 37,523,900 yuan, an increase of 94.23% over the previous year; and net profit attributable to shareholders of listed companies was 27.6497 million yuan, an increase of 82.12% over the previous year.
Traditional performance exceeded expectations
The increase in performance in the first half of the year was mainly a 25.96%, 19.82%, and 131.29% increase in revenue from high and low voltage electrical products, pump products, and trade products, respectively, which led to the company's performance growth. In terms of subsidiaries, Pump Machinery Group achieved a 69.56% year-on-year increase in operating profit. Chengdu Ruilien Electric, a subsidiary acquired in 2014, achieved revenue of 7.8825 million yuan, nearly double the revenue for the full year of 2014, and is growing rapidly. Profitability increased markedly, and gross profit margin and net interest rates both increased year over year. In a general environment where domestic and foreign market demand was insufficient and industrial production capacity was excessive, the company was able to achieve such performance, exceeding market expectations, and also reflected the company's effectiveness in adjusting its industrial structure.
New products are ready to go
The company has continued to work tirelessly in R&D and innovation. During the reporting period, upgraded products such as switches, circuit breakers, and transformers were put into production one after another. Chongqing Dayton Company's “10 kV central cabinet” achieved good results in the State Grid tender in the first half of the year; Chengdu Ruilien's “low-cost high-safety test terminal” also won the Chengdu and Sichuan Key New Product Awards. The company's 220KV superconducting current limiter product successfully passed the inspection by State Grid experts after 2 years of smooth operation on the network, and received high praise. We believe that superconducting current limiter products have no technical and operational performance barriers; they are about to enter the mass production stage, and the market space is broad.
Additional distribution projects are expected to be approved soon
The company's plan to raise no more than 1.1 billion yuan to invest in smart grids and high-temperature superconductor-related projects has been accepted by the Securities Regulatory Commission, and a serious response has been given to the CSRC's feedback on refinancing. IPOs and refinancing were suspended due to the stock market crash, and the progress of the increase was affected to a certain extent, and it is expected that approval will be obtained soon after the recovery.
Profit Forecasts and Investment Ratings
The EPS for 15-17 is expected to be 0.17, 0.30, 0.46 yuan/share. Maintain the increase in holdings rating.