Core ideas:

1. Event

Recently, the company issued a semi-annual performance forecast for 2017, which is expected to achieve a return net profit of 27 million to 32 million yuan, an increase of 1055.48% to 1269.45% of the company's annual EPS is about 0.033 to 0.039 yuan.

two。 Our analysis and judgment

(1) the quality of operation has been significantly improved, and the follow-up high growth is expected.

There are three main reasons for the sharp increase in the company's performance in the first half of the year: first, the company's sales volume and aluminum price have increased compared with the same period last year, and the sales revenue has increased significantly; secondly, the company's operating quality has significantly improved, the product yield has increased, and the gross profit margin has increased significantly; thirdly, the company's important R & D projects have been subsidized by the government through acceptance.

Taking into account the continued impact of the above factors, as well as the gradual production of 200000 tons of laminated metal composite project, we believe that the company can expect high growth in the next two years, and profitability is expected to continue to show significant growth in 2018.

(2) the establishment of a defense platform to show skills in the field of military industry

The company's aluminum alloy clad products have great technical advantages, and have signed a series of strategic cooperation agreements with Chinese weapon Materials Science and Research Institute and other institutes, which are expected to be used in armor protection and other fields. In addition, the 3D printing structure of subsidiary Feierkang has been successfully applied to the C919 and is expected to be copied to other military and civilian aircraft. The company will integrate business and resources, make every effort to promote the development of military business, and is expected to become one of the rookies in the field of new military materials.

(3) to implement two periods of employee stock ownership to demonstrate the company's confidence in development.

The company's first phase of employee stock ownership plans to complete the purchase in March 2016, buying a total of about 8 million shares, with an average price of 6.64 yuan per share. The second phase of employee stock ownership plans to complete the purchase in June 2017, buying a total of about 18.08 million shares at an average price of 8.898 yuan, which is close to the company's current share price. The employee stock ownership plan helps to coordinate the interests of all aspects of the company and support the continuous growth of the company.

3. Investment suggestion

It is estimated that the return net profit of the company in 2017, 2018 and 2019 is 120 million, 260 million and 310 million respectively, and the EPS is 0.15,0.32 and 0.38 yuan, respectively. The current share price corresponds to 61x, 28x and 23x. At present, the company's market capitalization is relatively small, and the space for military business development and capital operation is relatively large. It covers for the first time and is given a "recommended" rating.

Risk Tip: the risk of market expansion falling short of expectations