The company released its semi-annual report for 2017: in the first half of 2017, the company achieved operating income of 162 million yuan, an increase of 6.57% over the same period last year, and net profit of 8.4688 million yuan, down 31.25% from the same period last year, corresponding to 0.08 yuan of EPS.
The revenue of precision cleaning equipment, the core product, has increased steadily. In the first half of 2017, revenue from precision cleaning equipment was 103 million yuan, up 32.21% from the same period last year; revenue from water treatment products was 33.9434 million yuan, down 28.80% from the same period last year; and revenue from electroplating products was 14.1915 million yuan, down 22.04% from the same period last year. From a quarterly point of view, the company's Q1 and Q2 achieved revenue of 45.3135 million yuan and 116 million yuan respectively, an increase of 2.64% and 6.57% over the same period last year.
The gross profit margin has fallen and the cost has increased. The company achieved a comprehensive gross profit margin of 33.29% in the first half of the year, down 2.25 percentage points from the same period last year, including precision cleaning equipment down 2.92 percentage points and water treatment products down 5.63 percentage points, mainly due to higher prices of raw materials and higher labor costs compared with the same period last year. As the company continues to expand, resulting in an increase in interest payments, costs have increased.
It is planned to improve the layout of the equipment and bring new bright spots for growth. The company plans to acquire 100% equity in Julius Baer Automation and actively layout the OLED industry. The performance of the 2017-2019 exam will be no less than 45 million yuan, 58.5 million yuan and 76.05 million yuan respectively, which will significantly increase the company's performance. Baosheng Automation's main business is to provide supporting equipment and production line to LCM/OLED flat panel display and touch production enterprises, and the downstream is mainly concentrated in the LCM/OLED industry, which has high prosperity and strong demand, and is likely to fulfill its performance commitment. After the acquisition, it will give full play to the synergy with the company, which will help the company to further expand the market share of precision cleaning equipment, while taking advantage of the peak growth period of the OLED industry in the next few years.
Profit forecast and rating: regardless of the impact of the company's acquisition and statement, we expect the company's EPS for 17-19 years to be 0.23,0.36,0.39 yuan. If the acquisition is successful, the company's pro forma performance dilution EPS is expected to be 0.61,0.84,1.03 yuan, giving the "overweight" rating.
Risk hint: the risk of intensified market competition and the risk of acquisition failure.
