1H2017 performance exceeded expectations
Oriental Tantalum Industry announced 1H2017 results: operating income of 460 million yuan, an increase of 21% over the same period last year; net profit attributed to the parent company was-95.35 million yuan, an increase of 42.54 million yuan over the same period last year, corresponding to earnings per share of-0.22 yuan. Deduct the net profit of non-return mother-100 million yuan. An increase of 44.09 million yuan over the same period last year. The net profit of 2Q17 in the single quarter was-42.81 million yuan, while the loss decreased by 22.73 million yuan / 9.74 million yuan compared with the same period last year. The main reason for the improvement in the company's performance compared with the same period last year is that sales growth and cost control are more effective.
Comments: 1) prices fell compared with the same period last year, but sales increased. The price of tantalum metal in 1H17 fell 4% from a year earlier, and the price of products in traditional industries such as tantalum and niobium also fell year-on-year. However, the company's sales of tantalum and niobium metals and niobium products increased significantly compared with the same period last year. 2) the gross profit margin has improved. 1H17's comprehensive gross profit margin increased by 10.9ppt to-0.9% compared with the same period last year, of which the gross profit margin of tantalum-niobium and its alloy products increased by 6.6ppt to 11.5% year-on-year, and that of titanium and titanium alloy products increased by 49ppt to-16.4%. 3) the loss of asset impairment increased by 11.53 million yuan compared with the same period last year, affecting EPS by about 0.03 yuan, mainly due to an increase of 16.4 million yuan in inventory decline loss compared with the same period last year. 4) the management expenses decreased by 16% compared with the same period last year, and the management expense rate decreased by 5.2% to 12% compared with the same period last year, and the cost control achieved certain results. 5) the cash flow of operating activities increased by 24% to 150 million yuan compared with the same period last year.
Trend of development
Long-term growth also depends on the upgrading of product structure. The company's traditional industries such as tantalum and niobium are still in a relatively depressed state. The company will speed up the adjustment of product structure and increase the development of medical smelting tantalum and medical tantalum wire. The company will strengthen the market development of superconducting materials and other new products, which is expected to bring new sources of growth. 1H17's new product sales reached 79.73 million yuan, accounting for 17% of the revenue.
Profit forecast
Considering that the company's first-half results exceeded expectations, we raised our earnings per share forecasts for 2017 and 2018 by 32% and 31% respectively from-0.72 yuan and-0.46 yuan to-0.49 yuan and-0.32 yuan respectively.
Valuation and suggestion
At present, the company's share price corresponds to 4.0x 2018e P hand B. We maintain a neutral rating and a target price of 10.00 yuan, which is 2.15% lower than the current share price.
Risk.
Demand fell short of expectations.