Net profit in the first quarter fell 17.2% compared with the same period last year, deducting a 6.7% increase in non-net profit compared with the same period last year. The company released a quarterly report, with operating income of 800 million yuan in the first quarter, an increase of 6.8% over the same period last year; net profit of 68 million yuan, down 17.2% from the same period last year; net profit after deduction of 67 million yuan, an increase of 6.7% over the same period last year; and fully diluted EPS of about 0.08 yuan.

The sharp decline in non-recurring profit and loss leads to a decline in the company's net profit compared with the same period last year.

The company's net profit decreased in the first quarter compared with the same period last year, while the net profit after deduction increased compared with the same period last year, mainly due to the non-recurrent profits and losses made by the company in the first quarter of 13 years, such as recognizing a large number of government subsidies and returning a large number of bad debts.

The proportion of supporting equipment within the group has increased significantly, and sales have entered a period of climbing.

The company's operating income in the first quarter increased by 6.8% compared with the same period last year, mainly due to the increase in sales of internal matching diesel engines. The company has a perfect product line of diesel and natural gas engines, which is used in trucks, buses and other equipment. Due to the stability of the downstream industry and the gradual increase in sales of internal supporting models, the company's product sales have entered a climbing period.

The turbocharger has entered a period of rapid growth, contributing to a substantial increase in investment income.

The company's investment income increased by 64.7% in the first quarter compared with the same period last year, mainly due to the high-speed growth period of the associated company Lingzhong supercharger. We believe that the turbocharger to achieve energy saving and emission reduction at a lower cost, 13 years has entered the first year of rapid growth period, with the rapid improvement of turbocharger penetration in the passenger car industry, the company's investment income is expected to explosive growth.

Investment suggestion

The company is in the vanguard of the reform of state-owned enterprises and the beneficiaries of energy conservation and emission reduction. We estimate that the EPS of the company in 14-16 is 0.29,0.46 and 0.60 yuan, and the corresponding share price PE is 35.1,22.2 and 17.0 times respectively, maintaining the "prudent overweight" rating.

Risk hint

The company's risk mainly comes from the failure of new product sales to meet expectations and the decline in macroeconomic prosperity.