Event: Ningbo Dongli announced its three-quarter 2017 report that from January to September, the company realized operating income of 5.575 billion yuan, an increase of 1422.83% over the same period last year, and its net profit was 67.9605 million yuan, an increase of 1242.97% over the same period last year, corresponding to EPS of 0.14 yuan, + 1300% over the same period last year. Among them, the company realized revenue of 5.245 billion yuan in the third quarter, + 4027.3% over the same period last year, and net profit of 52.884 million yuan, + 2715.18% over the same period last year.

Comments:

The company acquired the rich supply chain to transform the supply chain business, which led to a substantial increase in performance in August.

The company announced the acquisition of 100% stake in the Nianfu supply chain in June 2016 and completed the acquisition in July 2017. The results began in August 2017. After the acquisition of Nianfu supply chain, the company's main business completed the transformation from motor to supply chain business, and the volume of the company's traditional equipment manufacturing business was small, with an income of about 531 million yuan and a net profit of about 20.1707 million yuan in the first three quarters of 2017. Rich supply chain has been engaged in the supply chain industry for ten years, with a large volume of business, contributing 5.044 billion yuan in income and 47.789 million yuan in net profit from August to September.

There is little pressure on the rich supply chain to achieve its performance commitment in 2017. The original shareholder of Nianfu supply chain promised that the net profit of the company in 2017 and 2018 would not be less than 2.2 million yuan / 400 million yuan respectively. According to the expected 2017 results announced by Ningbo Dongli in its three quarterly reports (net profit of 140 million to 170 million yuan), we expect the annual rich supply chain to contribute 110 million to 140 million yuan in net profit from August to December. Due to the small seasonal fluctuation of the annual rich supply chain business, we predict that the annual rich supply chain itself will achieve 220 million to 280 million yuan in 2017, and there is little pressure to fulfill the performance commitment.

The rich supply chain accelerates the expansion of new areas of medical devices while ploughing deeply into the field of electronic information.

In 2016, Fortune supply chain added new well-known customers in the electronic information industry, such as TCL and Xiamen Meitu, and in recent years, it has accumulated nearly 30 well-known medical customers, including Siemens, Toshiba, Union Hospital and Armed Police General Hospital. In 2017, the electronic information supply chain business forecast reply accumulated 33.9 billion yuan of business volume, medical devices have signed contracts of 300 million yuan, the certainty of high business growth.

Investment advice: the company achieves the transformation of its main business through the acquisition of the annual rich supply chain. Based on the expected endogenous growth of the annual rich supply chain performance, we estimate that the company's EPS will be 0.21 EPS 0.49 won from 2017 to 2019, and PE will be 0.61 yuan, respectively, with a "buy" investment rating.

Risk tip: the business of old customers is depressed, and the expansion of new customers is not as expected.