Event: the company released its 2017 semi-annual report, with revenue of 699 million during the reporting period, an increase of 29.5% over the same period last year, and a net profit of 51.397 million, an increase of 12.4% over the same period last year. Sales expenses increased by 51.4%, administrative expenses by 40.8%, and financial expenses by 695.2%.
Photovoltaic performance made a great contribution, and the cost increased during the period: in the first half of 2017, the revenue growth mainly came from the power engineering service business. A number of projects such as Tinghui distributed Photovoltaic, which the company acquired in August 2016, were successfully connected to the grid. Due to the rising prices of steel, aluminum and other raw materials, the proportion of photovoltaic increased, the company's overall gross profit margin fell to 28.3%. It has decreased by nearly 10 percentage points compared with the same period last year. The increase of subsidiaries and business promotion increase the company's sales fees and management fees, and the interest expenses caused by the increase in bank loans make the financial expenses increase significantly.
Enter the photovoltaic distribution industry and improve the business general contracting capacity: the company's photovoltaic industry achieved revenue of 320 million yuan in 2016 and 280 million yuan in the reporting period, an increase of 56% over the same period last year, accounting for 40.6% of revenue in the first half of 2017, and has become the company's first main business. The first-class design institute "Huawang Electric Power" acquired by the company has further improved the company's general contracting business capacity and created a complete industrial chain of the integrated energy management system.
Active layout of new energy vehicles, mergers and acquisitions are expected: the company actively builds a new energy vehicle industry based on the manufacture and operation of special components of new energy vehicles, and successively acquires vehicle charger enterprises in 2016. Hunan Changgao New Energy vehicle Operation Co., Ltd., a wholly-owned subsidiary, is set up to cut into the field of new energy vehicles from core technology research and development to vehicle rental and sales, high-voltage distribution assembly and charging pile construction and operation. In April this year, the company jointly established a new energy vehicle service company serving high-frequency ride-hailing and taxi services, and a subsidiary for the construction and operation of the rechargeable power network in Hunan, further extending the layout of the new energy vehicle industry.
China's backbone enterprises in the development and production of high-voltage electrical appliances: the company is mainly engaged in the production and sales of all kinds of high-voltage and ultra-high-voltage switchgear needed for the construction of large-scale power plants and power transmission and transformation, and is the backbone enterprise in the development and production of high-voltage electrical appliances in China. It has been among the best in the bidding of the national network and southern power network for three consecutive years, with an average market share of 25.1%. The development of the main industry is steady, while closely following the development of new energy, marching into the photovoltaic industry and the field of new energy vehicles, with photovoltaic general contracting capacity, new energy vehicle business capacity, pay attention to industrial investment, and the results are gradually emerging.
Profit forecast and investment advice. It is estimated that the EPS from 2017 to 2019 will be 0.26,0.32 and 0.40 yuan respectively. The company has a sound layout in many new energy fields and will maintain a "buy" rating with the rapid growth of the industry.
Risk hint: the development of new energy vehicle industry may not be as expected, and the risk of raw material price fluctuation.