Due to the progress of delivery, the first-half results are slightly lower than expected and are expected to turn losses into profits for the whole year:
According to the company's announcement, the operating income was 371 million yuan, a decrease of 43.29% compared with the same period in 2016, and the net profit was-71 million yuan, a decrease of 69.60% compared with the same period in 2016. At the same time, the company released a forecast of third-quarter results, achieving a net profit of-8700 to-8950, slightly lower than expectations as a whole. The sharp decline in performance in the first half of 2017 was mainly due to the influence of the rail transit vehicle plate, and the realized revenue of the rail-to-transportation business fell 95.70% compared with the same period last year, mainly due to the delay of the delivery cycle of rail transit vehicles due to factors such as project construction progress, customer demand progress and so on. According to the construction of Chengdu subway, the company is full of orders on hand, is expected to achieve mass delivery of subway vehicles in the second half of the year, and is expected to turn losses into profits for the whole year.
The strategic synergy effect of major rail transit is obvious. Since 2015, the company has gradually stripped off the low profitability of traditional construction machinery and other plates to achieve the focus of the rail transit plate. At present, the company has formed the industrial chain layout of rail transit vehicles, tracks and three series of products, and has become one of the companies with the most perfect rail chain layouts. And 100% low-floor tram, embedded continuous support non-buckle track system, super capacitor and other technologies have reached the leading level in China. Taking Chengdu Xinjin modern tram demonstration line R1 as an example, the company provides a new track system, tram vehicles and their super capacitors, and the strategic layout of large rail interchange has obvious synergistic effect. The traditional business bridge functional structure of the company has a net interest rate of more than 10%, which is a leading enterprise in China. After the company began to lay out the track in 2011, the initial investment was so large that it did not generate revenue until 2015, resulting in a sharp decline in all aspects of the company's profitability since 2012. At present, the layout of rail transit business has matured, has passed the early stage of high investment, and R & D costs are expected to be reduced. At the same time, the company gradually integrates functional departments to reduce the rate of management expenses, and achieve simultaneous substantial growth of income and net profit.
The introduction of the restricted stock incentive plan to stimulate the enthusiasm of employees, and the high growth performance target shows the company's confidence in the future development: according to the company announcement, the number of restricted shares to be awarded under the incentive plan is 10.63 million shares. the incentive target is the company's directors, senior managers, core management and technical personnel, and the price is 4.63 yuan per share for the first time. Among them, the performance evaluation target is not less than 1.6 billion yuan in 2017, 2.7 billion yuan in 2018 and 3.7 billion yuan in 2019, with corresponding income growth rates of 6%, 70% and 40%, respectively, indicating that the company has ushered in an upward inflection point. the performance goal of high growth shows the company's confidence in future development. Through the implementation of the stock incentive plan, we can fully mobilize the enthusiasm of the company's employees, effectively combine the interests of shareholders, the company's interests and the personal interests of the core team, and promote the smooth implementation of the company's strategy.
Rail transit vehicle business is about to enter the volume period, ushering in a substantial increase in revenue and profitability: the company has formed the final assembly capacity of urban rail transit vehicles represented by modern trams and subways, as well as the production and processing capacity of key components, car bodies and bogies. At the same time, the company's actual controllers and actors plan to introduce strategic investors through the reduction of holdings in order to further increase and speed up the company's business development in rail transit and other core areas. ① revenue side: in the subway field, the company has a market share of about 50% in Chengdu; in terms of trams, it has a 100% market share in Chengdu. Simply considering the Chengdu market, Chengdu District will add 360km of subway mileage and 150km of tram mileage during the 13th five-year Plan period, taking into account the share that the company can get. it is estimated that the average annual demand for rail vehicles corresponding to the company is 4 billion yuan, and the revenue of the company's rail transit business in 2016 is only 670 million yuan, which is large enough for growth. ② profitability: at present, the rail transit vehicle business mainly produces model B. the model company only carries out the final assembly link, the key components are not produced independently, and the gross profit margin is only 5%. In the future, the market demand will mainly be model A cars. In addition to having the vehicle assembly capacity, the company will independently process and produce the body part of the vehicle, which will greatly increase the gross profit level of the whole vehicle of the company.
The new track system has a market space of 10 billion yuan, and the company's products are expected to become an important increment of the company's future performance during the experimental promotion period: the new track system has the advantages of restraining rail wave grinding, long service life, low operation and maintenance costs, and remarkable vibration and noise reduction performance. with the advantages of rapid on-site construction, its application is very mature abroad, and it is in the early stage of promotion in China.
The company began its research and development in 2012, and is currently applied in the Xinjin R1 line and Yunnan Honghe tram project, and tested on Guangzhou Metro Line 14. After the successful completion of the test, it plays an important role in promoting the promotion and application of the company's new rail transit system.
The new rail transit system costs about 7 million per kilometer (single line) of trams, and the subway is higher, facing the national market, with a total potential market size of more than 10 billion. As the first entrant in the industry, the company has obvious advantages. it is expected to become an important growth point of the company's performance in the future.
The supercapacitor business has entered a period of rapid growth: in 2015, the company entered the supercapacitor field through the acquisition of a 51 per cent stake in Ogilvy Technology, with revenue of 60 million in the first half of 2017, an increase of 253 per cent over the same period last year. Aowei technology super capacitor system is mainly used in modern trams, new energy buses, tunnel locomotives and other fields, in the leading position in China, in which the market share in the field of trams has reached 90%. With the rapid growth of the application of trams and new energy vehicles, supercapacitor business is expected to grow significantly.
Profit forecast and rating: the company's 2017-19 return net profit is expected to be 0.47,1.96 and 357 million yuan respectively, an increase of 151.85%, 315.42% and 82.32% respectively over the same period last year; the corresponding EPS is 0.07,0.30,0.55 yuan respectively, and the PE is 104.13, 25.07 and 13.75 times respectively. Performance ushered in an upward inflection point, maintaining the "highly recommended" rating.
Risk factors: low expectations for rail vehicle delivery and a sharp decline in traditional business.