Events:
Tuo Rixin can release its semi-annual report for 2017. during the reporting period, the company achieved operating income of 829 million yuan, an increase of 29.35 percent over the same period last year, while the net profit belonging to shareholders of listed companies was 87.09 million yuan, up 49.63 percent from the same period last year.
Main points of investment:
The EPC business grew faster than expected, and the packaging model led to component sales. During the reporting period, the company's EPC project revenue increased significantly, realizing 211 million yuan in the first half of the year, an increase of 24 times compared with the same period last year. Significant progress has been made in the business areas of poverty alleviation power stations and agricultural-photovoltaic complementary power stations. During the reporting period, the EPC project of 51MW power stations was undertaken and connected to the grid smoothly.
Rooftop distributed power stations have been vigorously promoted in markets in South China, Shaanxi, Qinghai and Kashgar.
The smooth expansion of the EPC project has led to the sales of the company's components. In the first half of the year, the revenue of crystal silicon components was 428 million yuan, an increase of 18.08% over the same period last year.
The operation scale of the power plant is constantly increasing, strengthening the foundation for stable growth of performance. At present, the company's self-operated photovoltaic power station projects a total of 260MW, not from some grid-connected power stations are expected to reach 1GW, in the long run will become another important performance support point. During the reporting period, affected by the decline in government electricity price subsidies and the refurbishment of Dingbian 50MW power station lines, electricity revenue decreased slightly compared with the same period last year, reaching 110 million yuan, down 11.93% from the same period last year.
At present, the power generation situation of the company's self-owned power station is relatively ideal, with the continuous improvement of abandoned light and large-scale operation, the gross profit margin of this sector is expected to maintain a high level.
The vertical integration industry chain has obvious advantages, rapid response and synergy advantages help the company's long-term development.
The company's gross profit margin in the first half of the year was 22.12%, down 3.37% from the same period last year, mainly due to a large increase in the proportion of EPC business income with low gross margin during the reporting period. After 15 years of development, the company has achieved steady growth in several rounds of large cycles in the photovoltaic industry, highlighting the company's strong anti-risk ability. In the field of crystalline silicon solar cells, the company has formed a relatively complete industrial chain structure, such as "crystal silicon rod drawing / polysilicon casting-slicing-battery chip manufacturing-battery-EPC project general contract". The price of components has fallen by more than 30% since last year, and the gross profit margin of the company's battery chips and components is basically the same as the same period last year. According to the change of market demand, the company can give full play to the advantages of rapid response and coordination, adjust the production plan of each link of the industrial chain in time, and maintain a sound management style in the rapid development.
The effect of cost control is remarkable, and the core competitiveness continues to improve. In terms of current expenses, the company's sales expenses in the first half of the year were 16.0537 million yuan, down 35.54% from the same period last year, mainly due to a significant increase in project revenue in the first half of the year, and the packaging mode of project-driven product sales significantly reduced marketing expenses; management expenses decreased by 3.14% compared with the same period last year. The effect of collectivization management and control of expense expenditure is obvious; financial expenses increased by 81.33% compared with the same period last year, mainly due to the growth of credit scale. The company continues to carry out research and development and technological innovation to shape the core competitiveness in the process of reducing costs and increasing efficiency. The company's manufacturing capacity of production equipment has been recognized by overseas markets, and the entire production line is sold to Pakistan, India and other regions. The company extends the focus of the international market to Southeast Asia, the Middle East, Africa and South America, actively developing emerging markets and bringing new development opportunities for the company.
Profit forecast and investment rating: it is estimated that the EPS of the company from 2017 to 2019 is 0.12,0.16,0.21 respectively. We are optimistic about the company: 1) vertical integration industry chain advantages, core business component sales, power plant operation and EPC business growth; 2) excellent rapid response and synergy advantages, strong cost control and anti-risk ability. Coverage for the first time, giving the company an "overweight" rating.
Risk hints: the risk of photovoltaic policy change; the risk of performance growth falling below expectations; the risk of declining gross profit margin of the industry; the risk of uncertainty in overseas markets