Matters

Jinshi Oriental released its 2015 interim report, with operating income of 70.04 million yuan, down 30.85% from the same period last year, while net profit belonging to shareholders of listed companies was 14.99 million yuan, down 21.63% from the same period last year.

Main viewpoints

1. The economic situation is grim, and business income has dropped sharply.

Affected by the slowdown of domestic economic growth, the tightening of investment in municipal infrastructure and the postponement of production expansion plans of downstream pipeline manufacturing enterprises, the company's main products steel belt reinforced plastic pipe production line and winding steel wire reinforced pipe production line only achieved revenue of 49.9 million yuan and 12.27 million yuan respectively, down 22.84% and 57.78% from the same period last year.

Due to the weak demand in the downstream market, the gross profit margin of the steel strip reinforced plastic pipe production line decreased by 9.7% compared with the same period last year, but it was still at a high level of 39.56%. The gross profit margin of the winding steel wire reinforced pipe production line increased significantly by 47.76% to 38.64%. This is because 1. A winding steel wire reinforced pipe production line belongs to the customer's request for a short delivery time, so the price is 2. 5% higher. The other three production lines are technically improved due to the special process requirements put forward by customers, so the price is higher.

two。 The three fees continue to rise, and the cost control needs to be strengthened.

The company's sales expense rate was 6.67%, an increase of 1.67% over the same period last year, of which office expenses, advertising and after-sales service fees all increased significantly; the management expense rate reached 14.97%, an increase of 3.4% over the same period last year, of which labor costs increased by 22%; the financial expense rate was the same as the same period last year; there is huge room for improvement in the company's three fees.

3. Cash flow has increased significantly.

The net cash flow generated by the company's operating activities was 24.18 million yuan, an increase of 245.30% over the same period last year. This is because: 1. The decrease in product sales directly led to a decrease of 44.5% in cash for purchasing raw materials and receiving labor services compared with the same period last year. two。 In the first half of the year, the company received a government subsidy of 3 million yuan and a previous refund of 7.38 million yuan. 4. The main business is single, actively layout new profit points.

While maintaining the leading technical position in the subdivision industry, the company is speeding up the development of new products, in which 30 million yuan and 70 million yuan are invested in wire mesh skeleton reinforced pipe and steel belt reinforced spiral bellows respectively, in order to break the predicament of single business as soon as possible and add new growth drivers.

5. Profit Forecast:

It is estimated that the EPS of the company in 2015-16 is 0.81,0.98 yuan, and the corresponding PE is 76 and 63 times respectively, which is cautiously recommended.

Risk hint

The continued decline in the macroeconomic sector has led to sharp fluctuations in downstream demand. The company's new product development failed.