Brief comment on performance

According to the company's semi-annual report for 2017, the company's revenue in the first half of 2017 was 886 million yuan, down 4.57 percent from the same period last year, and the net profit attributed to shareholders of listed companies was 76 million yuan, down 7.35 percent from the same period last year. The gross profit margin was 22.40%, down 1.26% from the same period last year, and the net profit rate was 8.63%, down 0.25% from the same period last year, EPS0.09 yuan.

Business analysis

The performance declined slightly, and the mold revenue was confirmed to be lower than expected. In terms of moulds, the operating conditions of German subsidiaries gradually improved, with a net profit of 13.96 million yuan in the first half of the year, reversing losses. It usually takes about 12 months from the newly signed order to the revenue recognition, and the order is not synchronized with the performance recognition. At the end of the first half of the year, the scale of the acceptance project was relatively low, and the revenue scale of the mold business decreased by 29.3% compared with the same period last year. At the same time, due to the low gross profit margin of some projects with a long cycle, the gross profit margin fell 5.16 percentage points compared with the same period last year. In terms of stamping parts, new stamping customers during the reporting period included Hebei ZTE, BAIC New Energy, Guoneng and NIO Inc., and the fund-raising projects gradually released production capacity. in the first half of the year, the revenue of the stamping parts business increased by 47.55% compared with the same period last year, and the gross profit margin increased by 6.88% over the same period last year. The company expects to achieve a net profit of 82 million yuan to 113 million yuan attributable to shareholders of listed companies in the first three quarters, a year-on-year change of-20% to 10%.

There are plenty of orders on hand, and the fields of new energy and military industry have been developed steadily. During the reporting period, the company continued to open up the market, with a total of 7.01 yuan in newly signed orders, including 294 million yuan in overseas markets. At present, the company has a good ability to take orders, with 2.5 billion yuan in hand orders, and from the point of view of the order structure, it is expected that after the realization of sales, the gross profit margin will be improved. In terms of new energy vehicles, in the first half of the year, the company signed new energy car customers, such as smart car, Weima automobile, etc., and has signed stamping parts and assembly and welding business supply agreements with NIO Inc. automobile and Guoneng automobile. In the field of military industry, Shenyang Tianqi Mould, a wholly-owned subsidiary, has obtained the certification of weapons and equipment quality management system, has the ability of research and development, production and service of military products in related fields, and has made steady progress in the field of military industry.

Investment suggestion

Based on the mold, actively extend the industrial chain, the layout of emerging industries, performance valuation is expected to improve. It is estimated that the EPS of the company from 2017 to 2019 is 0.21,0.27,0.33 yuan respectively. Buy rating, target price is 10 yuan.

Risk hint

The number of new car development is lower than expected; overseas business expansion is not as expected.