Main points of investment:
Revenue in the first half of 2017 increased by 72.59% over the same period last year, and net profit from home increased by 34.56% compared with the same period last year. In the first half of 2017, the company achieved revenue of 921 million yuan, an increase of 72.59% over the same period last year, and a net profit of 100 million yuan, an increase of 34.56% over the same period last year. The income per share is 0.15 yuan.
Guanzhi & Huaxiao and Yongqian promote a substantial increase in revenue. The substantial increase in H1 revenue in the past 17 years is mainly due to: 1) combined factors, Guanzhi Automation / Huaxiao Precision reported from May to June last year; 2) Yongqian mechanical and electrical customized integrated system service business developed smoothly; 3) power distribution and rail transit electrical automation business grew rapidly.
The development of integrated system business led to a decrease in gross profit margin and a slight decrease in expense rate during the period. In 2017, H1, the company sold a comprehensive gross profit margin of 34.11%, down 5.25 pct compared with the same period last year, while the gross profit margin of intelligent manufacturing and robot applications decreased 7.78pct, due to the smooth business development and increased share of Yongqian integrated system service providers with slightly lower gross profit margin. The expense rate during the period is 22.75%, which is slightly lower than the same period last year (0.86pct), sales expense rate (8.01%/-0.24pct), management expense rate (1.485%/-0.87pct), and financial expense rate-0.12%/+0.26pct.
Yongqian Mechatronics: the business of integrated system is developed rapidly. In 2017, H1, Yongqian Machinery and Machinery realized revenue of 296 million yuan and net profit of 36.22 million yuan. The company's market share in the robot field has exceeded 70%. In the past 13 years, the company has expanded from a single manipulator business to the field of customized integrated systems, and has achieved rapid growth. While consolidating the share of the traditional automotive field, the company has rapidly expanded its integrated production line business in areas such as lithium batteries / diapers, and has established close cooperation with domestic mainstream manufacturers such as Guoxuan Hi-Tech, with the rapid development of the field of new energy vehicles, we expect the company's orders and revenue in the lithium battery industry to grow rapidly.
Guanzhi-Huaxiao performed well and had significant synergistic effect. In the first half of 2017, Guanzhi Automation realized revenue of 208 million yuan and net profit of 25.01 million yuan. The company is an A-class supplier of Shanghai Volkswagen, which has gradually broken through Changan Ford and other manufacturers in recent years; at the same time, the company is expected to gradually land from the side wall welding production line to the bottom plate, door cover and general assembly field. At present, the company has a lot of orders on hand, and we expect it to be a high probability event to fulfill the performance commitment this year and next year. In the first half of 2017, Huaxiao achieved a revenue of 134 million yuan and a net profit of 5.87 million yuan. The company and Yongqian / Guanzhi achieved good coordination and entered many mainstream automakers in China, and the downstream field gradually expanded to electronics / power / machinery and other fields.
It is proposed to acquire intelligent shares in Yingli Wushu, Shanghai Qiancheng and Sanqu. The company recently announced that it intends to issue shares and pay cash to acquire 100% of Wushu, 38% of Shanghai Qiancheng and 49% of Sanqu Intelligence (Yongqian currently owns 57% of Shanghai Qiancheng and Shanghai Qiancheng 51% of Sanqu), and raise matching funds. IWU's main business is RFID tags and antennas, with the acquisition of Yingnei to create an important part of the company's intelligent storage system; Shanghai Qiancheng mainly engaged in new energy battery assembly line, fresh air assembly line, etc., Sancheng Intelligent main diaper, sanitary product automation production line, etc., the acquisition of shares in Qiancheng and Sanqu will help to further increase the company's business development in the areas of power lithium electricity and sanitary products.
Actively lay out the field of "artificial intelligence + health". In March, 17, the company invested 1.1 billion yuan to build the intelligent robot and artificial intelligence industrial base of HKUST, and the strategic layout of "artificial intelligence + health" and other fields. Relying on the Fudan-University of Science and Technology Intelligent Robot Joint Laboratory, the project will initially be settled in the field of medical image intelligent reader / health consultant robot.
Profit forecast and investment advice. Excluding other extension acquisitions, the company's operating income from 2017 to 2018 is expected to reach 2.138 billion yuan and 2.555 billion yuan, and its net profit will reach 350 million yuan and 436 million yuan, an increase of 26.61% and 24.42% respectively over the same period last year. The earnings per share are 0.48 yuan and 0.60 yuan. Considering that the company's recent epitaxial acquisition is in progress, if the landing will bring certain thickening to the future performance and EPS, we will give it a valuation of 50 times in 2018, corresponding to the price of 30 yuan per share, and increase the rating.
Risk factors. The risk of industrial integration falling short of expectations.