Main points of investment: sign a contract for the sale of 63.46 million US dollars of special smelting equipment and complete sets of waste heat power station equipment, accounting for 60.63% of the company's operating income in 2014, which is expected to greatly improve the company's performance in 2015. The company relies on the Indonesian Nickel Iron Industrial Park project to integrate Indonesian mineral (coal, nickel) and power plant resources to create a complete nickel industry chain; and with the Indonesian industrial park project as the starting point, open up the overseas sales market of special smelting equipment (mechanical equipment business), and the performance will continue to grow at a high speed.
Event: the company signed the contract for complete sets of special smelting equipment and waste heat power station equipment for the second phase of the blast furnace project with PT.PacificMetalurgiIndoSmelter on June 19th, with a contract amount of US $63.46 million, which will be delivered in batches from August 1, 2015 to the end of December 2015.
The other side of the transaction is to stabilize the customer for the company. PT.PacificMetalurgiIndoSmelter is a Singapore company registered in Indonesia, mainly engaged in metal smelting, production and operation. PT.PacificMetalurgiIndoSmelter signed the contract of complete sets of special smelting equipment and waste heat power station equipment for the first phase of the blast furnace project with the company on April 3, 2015, with a contract amount of 37.28 million US dollars.
The contract will greatly improve the performance. The above sales contract amount is US $63.46 million, which is equivalent to about 393.452 million yuan (based on the exchange rate of RMB to the US dollar at 6.2 1), accounting for 60.63% of the company's audited main business income in 2014. Based on the progress of the sales contract, which is scheduled to be delivered by the end of December 2015, it is expected to have a significant impact on the company's operating results in 2015.
Orders continue to be released, and a big increase in performance in the first half of the year will be realized. The company is expected to achieve a profit of 1.77-187 million yuan in the first half of the year, an increase of 1058-1123% over the same period last year. The company's profit increased greatly compared with the same period last year. The main reasons are: (1) the large contract signed in 2014 will continue to contribute to the company's profits, and orders are currently being executed for about 1 billion yuan. According to the production plan, the semi-annual output value will increase significantly over the same period in 2014, which will greatly increase the net profit belonging to the shareholders of the listed company. (2) the non-recurrent profit and loss of the company is expected to be 1.03 million yuan in the first half of the year and 900000 yuan in the same period in 2014.
Maintain the company's "buy" rating. The company relies on the Indonesian Nickel Iron Industrial Park project to integrate Indonesian mineral (coal, nickel) and power plant resources to create a complete nickel industry chain. Taking the Indonesia Industrial Park project as the starting point, we will open up the overseas sales market of special smelting equipment (mechanical complete sets of equipment). In 2015, the total sales contract value of special smelting equipment and waste heat power station equipment reached 101 million US dollars. coupled with the execution of orders in 2014, the company's sales revenue in 2015 will increase significantly, and its performance will continue to grow at a high speed. According to the company's performance and project progress, the company's EPS in 2015-2016 is expected to be 1.70 yuan and 2.55 yuan respectively. Combined with the average valuation level of the nickel sector and the "Belt and Road Initiative" strategy to improve the company valuation level, we give the company a target price of 101.75 yuan, corresponding to 60 times PE in 2015, maintaining a "buy" rating.
Risk hint. Policy risk; order schedule risk; project production risk; exchange rate fluctuation risk.
