This report is read as follows:
The company's home net profit in the first half of the year increased by 22.52% compared with the same period last year. We continue to be optimistic about the company's leading position in the membrane field, the prospect of industrial water treatment, as well as flexibility in the field of engineering and water purifiers, and maintain the "overweight" rating.
Main points of investment:
Maintain the "overweight" rating: taking into account the new capacity put into production run-in period, we slightly downgrade the company 17-18 EPS to 0.39, 0.53 yuan (the original 0.43, 0.60 yuan), maintain the target price of 19.38 yuan, maintain the "overweight" rating.
Wharton's comprehensive consolidation is the main reason for the performance growth, waiting for the Shawen Phase II project to bring new growth momentum. Time Wharton's 20.39% stake merged in November 2016, and we estimate that this part contributed about 15 million yuan to the first half of the year. The leading position of Wharton reverse osmosis membrane industry is solid, and the production capacity of Shawen Phase II project is expected to create new growth momentum.
Participate in Huitong Environmental Protection to obtain engineering qualification, and there is much room for improvement of performance flexibility. In the first half of the year, the company participated in Huitong Environmental Protection Company with a stake of 59 million, with a stake of 40.68%. After obtaining the construction capacity of the project through equity participation in Huitong Environmental Protection, it is expected to quickly cut into overseas seawater desalination, domestic reclaimed water treatment, industrial desalination treatment and other engineering service markets, which is expected to rapidly improve performance flexibility.
The business of water purifier is expanding steadily, and the commercial field is expected to make a breakthrough. After strategic adjustment, the company will focus on the commercial water purification market for buildings. Other industries (mainly water purification equipment) have achieved revenue of 6.07 million, an increase of 2794% over the same period last year, and losses have been reduced compared with last year. The company and several major water purifier sales enterprises have film supply cooperation, in the future will further start the brand, in this field to achieve a breakthrough.
Actively optimize the management, the expense rate has decreased. During the first half of the year, the total cost of the company was 140 million, and the rates of sales, management and financial expenses were 9.28%, 18.24% and 0.36% respectively, with year-on-year changes-1.00PCT,-1.01 PCT and 0.48 PCT. Through active management and adjustment of personnel arrangements in state-owned enterprises, the rate of sales and management expenses dropped significantly, leading to a decline in the overall expense rate.
Risk hint: the growth rate of water purifier sales is lower than expected; nature's gross profit margin continues to decline sharply.
