Event

Xingguang Agricultural Machinery released its mid-2015 report that the company's operating income in the first half of the year was 353 million yuan, down 3.49 percent from the same period last year; operating profit was 67.9079 million yuan, down 33.22 percent from the same period last year; and net profit belonging to shareholders of listed companies was 58.3977 million yuan, down 32.66 percent from the same period last year.

Main viewpoints

1. Increased competition in the industry is a drag on performance.

The company's income from agricultural harvesters and accessories totaled 353 million yuan, down 3.58 percent from the same period last year, due to a big drop in foreign sales revenue due to the depressed market demand for combine harvesters in major exporting countries.

The gross profit margin of the company's agricultural harvesters and accessories was 23.75%, a decrease of 7.38 percentage points compared with the same period last year. This is due to the rapid expansion of production capacity of foreign enterprises in China by virtue of their quality advantages, resulting in intensified competition in the middle and high end of the harvester market and a decline in product sales prices.

The company's three fees increased during the reporting period. Among them, the increase in management expenses was 38.45%, mainly due to more R & D investment in new R & D projects and new listing costs; the increase in sales expenses was mainly due to the increase in dealer conference expenses in the current period.

two。 Excellent companies deserve long-term attention.

The company has a great advantage in the field of agricultural harvesters. It continues to develop, improve and upgrade the Xingguang series of combine harvesters, forming its own differentiated competitive advantage, and will take listing as an opportunity to increase R & D investment and market development efforts to improve core competitiveness.

3. The agricultural machinery industry is developing at a high speed and has a large market space.

China's harvesting machinery industry is in the stage of sustained and rapid growth. Among them, the number of combined harvesting (cutting) machinery developed rapidly from 410500 in 2004 to 1.2788 million in 2012. The market-oriented operation of agricultural cross-regional operation will continue to ensure the high growth rate of the harvesting machinery industry.

The degree of mechanization of harvesting machinery in our country is low, and the demand for upgrading is strong. The mechanization level of the machine harvest link is only 44.40%, which is far lower than the comprehensive farming mechanization level of 57.17%. With the further implementation of the agricultural machinery industry policy, the domestic market demand will grow rapidly as a whole and the space is large, and the company's prospects are optimistic.

4. Profit Forecast:

It is estimated that in 2015-17, the company's EPS will be about 0.45,0.64,0.80 yuan, corresponding to PE 66X, 47X, 37X, maintaining the "recommended" rating.

Risk hint

The risk of single product structure; the risk of policy change; the risk of seasonal fluctuation of production and operation.