Event: on August 17, the company released its semi-annual report of 2015. in the first half of the year, its operating income was 1.89 billion yuan, down 19.1% from the same period last year, and its net profit was 45.69 million yuan, a sharp increase of 136.3% over the same period last year.
The profit improved significantly and the performance was in line with expectations: the main reason for the sharp improvement in the company's profit in the first half of the year was the obvious improvement in sales of the main business, of which the revenue of compound fertilizer increased by 114% year-on-year, the gross profit margin increased by 2.1% year-on-year, and the price of urea products rose. Gross profit margin rose 20.5 percentage points year-on-year to 23.9%. (2) the operating income of the company's own products has increased, and the proportion of trade revenue has decreased, resulting in a decrease in the company's operating income, and the comprehensive gross profit margin has increased by 11.3 percentage points compared with the same period last year to 13.7%. (3) Mianyang Industrial Park has been officially put into production, the new production capacity began to increase the performance of the company, melamine and other products extend the urea industry chain and improve the added value of the products.
The automotive urea business is expected to break out. The company's automotive urea business revenue fell 21.4% year-on-year, lower than we expected, and the gross profit margin was basically the same as the same period last year. China's automotive urea industry is still in its infancy. As the only state-owned listed company in the industry, Sichuan Meifeng occupies the commanding heights with the first entrants and industry standard setters to guide the future development of the industry. Relying on the quality advantages, technical advantages, cost advantages and channel advantages of Meifeng plus Blue, we will try our best to promote the automotive urea business and open up new profit spaces. With the successive introduction of national air pollution control policies, especially the implementation of the four standards for diesel vehicles, we are firmly optimistic about the long-term development prospects of automotive urea and look forward to the outbreak.
Actively promote the LNG business, the Yazhong project is progressing smoothly: at present, the project is progressing smoothly, the construction is expected to be successfully completed this year, and the revenue will be contributed from 2016. The company has China Petroleum & Chemical Corp major shareholder background, determined to enter the energy industry, the layout of clean energy strategic thinking is clear. With the gradual promotion of China Petroleum & Chemical Corp's mixed ownership, it is more likely that its assets will be spun off into the platform of listed companies.
Performance forecast and valuation: we predict that the EPS of the company in 2015, 2016 and 2017 will be 0.25,0.60 and 0.82 yuan respectively, and the dynamic PE will be 41 times, 17 times and 13 times respectively. The reversal of the company's fundamentals confirms that we are optimistic about the long-term prospects of the company's automotive urea and LNG business and maintain a "buy" rating.
Risk hint: the risk of raw material price fluctuation, the risk that the production schedule of LNG project is lower than expected, and the risk that the market demand of automotive urea is lower than expected.