Event description

Xinjiang Urban Construction released its mid-2015 report, with operating income of 1.106 billion yuan during the reporting period, down 26.83% from the same period last year, gross profit margin 10.61%, 5.24% lower than the same period last year, and net profit attributed to the owner of the parent company-1.7 million yuan, down 104.73% from the same period last year.

Of this total, the operating income in the second quarter was 889 million yuan, down 39.44% from the same period last year, the gross profit margin was 16.03%, down 0.09% from the same period last year, and the net profit attributed to the owner of the parent company was 58 million yuan, down 18.70% from the same period last year, EPS0.08 yuan in the second quarter and EPS-0.085 yuan in the first quarter.

Event comment

Affected by the "environment", the main business declined in the first half of the year: the company's H1 revenue decreased by 26.83% compared with the same period last year, mainly due to the influence of "macro environment", "competitive environment" and "weather environment". In the macro aspect, the decline in infrastructure and real estate has been greatly affected by the overall downturn in real estate, with operating income falling by 96.27% compared with the same period last year. In terms of competition, the influx of large central enterprises and other peer enterprises into Xinjiang has intensified competition and squeezed company orders. In terms of climate, affected by the climate in Xinjiang, the first quarter belongs to the shutdown season, and the climate and other factors affect the overall construction cycle in the first half of this year, resulting in a decline in performance in the second quarter and a 39.44% drop in revenue compared with the same period last year.

In addition, in terms of expenses, financial expenses were further dragged down by an increase of 12.57% in loan interest, resulting in a net profit loss of 1.6944 million yuan in the first half of the year, a decrease of 104.73% compared with the same period last year.

The regional leader is expected to be driven by policy: the company is the leader of the construction industry in Xinjiang, has rich experience in local construction in Xinjiang, and is expected to benefit from "Belt and Road Initiative". In addition, with the 60th anniversary of the founding of Xinjiang Autonomous region approaching on October 1, policies on infrastructure and other aid to Xinjiang affected by national policies are expected to be speeded up, and infrastructure construction has always been the company's core competitiveness. the company has a good reputation in Urumqi and other parts of the autonomous region, and the promotion of infrastructure in Xinjiang is expected to bring considerable orders for the company.

It is estimated that the company's EPS in 2015 and 2016 will be 0.25 yuan and 0.39 yuan respectively, corresponding to PE63 and 41, which will be rated as "overweight".