In the first quarter of 2014, the company achieved operating income of 309 million yuan, down 23.66% from the same period last year; operating profit was 2.3 million yuan, down 76.98% from the same period last year; net profit attributed to the parent company was 1.56 million yuan, down 81.87% from the same period last year; after deduction, the net profit attributed to the parent company was-5.08 million yuan, down 154.57% from the same period last year. Based on the latest share capital, the income per share is 0.004 yuan.
The composite gross profit margin fell 3.02 percentage points, resulting in a sharp decline in performance. The company's comprehensive gross profit margin fell 3.02 percentage points to 7.79%; the expense rate during the period was 10.01%, a slight increase of 0.36% over the same period last year. The sharp decline in gross profit margin has led to a much larger decline in the company's performance than in revenue.
The railway general manager has raised its annual railway investment plan, and the company's profit performance may grow steadily. In 2013, railway investment in fixed assets totaled 663.8 billion yuan, slightly higher than the planned 660 billion yuan. According to relevant news, in 2014, national railway fixed asset investment will reach 720 billion yuan, an increase of 8.5 percent over the same period last year; new lines will be put into production of more than 7000 kilometers, an increase of more than 25.3 percent over the same period last year, up from 700 billion yuan and 6600 kilometers deployed at the National Railway work Conference at the beginning of the year. Driven by the growth of railway investment and the reform of the railway investment and financing system, the demand for railway transport equipment is expected to grow steadily, the company will benefit, and it is expected that there is a greater possibility of steady growth in performance in the next few years.
It is expected that new products such as high-speed car axles will become new performance growth points. The company has completed the high-speed car axle process research, process verification and other work. Through the technical scheme review of the expert group of the Railway Corporation, the company's products have been assembled in a small amount on the domestic EMU and entered the loading test stage. After entering the mass production of high-speed car axles, the company will benefit from the rapid growth of China's bullet train demand and form a new performance growth point. In addition, the company's C80ERF2 new heavy-duty truck axle has been put into mass production; the world's heaviest 40-ton axle axle has been delivered smoothly; the design of the vehicle exported to Pakistan has been completed and approved by the customer; the American SCT company has completed the trial production of 110t reinforced pillow, reduced weight side frame, 70t improved bolster and other products, and passed the dynamic and static load test. The grate sheet of municipal solid waste incinerator has been trial-produced and passed the technical appraisal. The R & D and commissioning of new products will become a new profit growth point for the company, and lay the foundation for the further expansion of the international market.
The company's business plan for 2014, production and sales increased significantly. According to the business plan announced by the company, 214000 axles (including axles for wheelsets and railway vehicles), 50, 000 sets of wheelsets, 3500 railway vehicles and 5940 pillow side frames were produced and sold in 2014. The year-on-year growth rates were 35%, 306%, 51% and 73%, respectively. We believe that it is difficult to complete the company's plan under the current demand situation.
Earnings forecast and rating: we expect earnings per share from 2014 to 2016 to be 0.35 yuan, 0.45 yuan and 0.59 yuan respectively. Based on the latest closing price, the corresponding dynamic price-to-earnings ratio is 36 times, 28 times and 22 times respectively, maintaining the company's "overweight" investment rating.
Risk hint: the risk that the investment of railway freight cars is not up to expectations, and the risk that new product research and development is not as expected.