Events:
The company released its quarterly report for 2017 on October 28. In the first three quarters, the company realized operating income of 9.414 billion yuan, up 0.35% from the same period last year; realized operating profit of 55.7807 million yuan, down 84.20% from the same period last year; and net profit belonging to shareholders of listed companies was 48.4034 million yuan, down 76.87% from the same period last year, and basic earnings per share was 0.01yuan, down 75.61% from the same period last year. The performance growth rate is in line with Shenwan Hongyuan's expectations. The company expects its net profit to range from 50 million yuan to 150 million yuan.
Main points of investment:
The scale of production capacity and operating income of the component link has expanded, but the profitability is under pressure. The company's revenue in the first three quarters of 2017 was 9.414 billion yuan, an increase of 0.35 percent over the same period last year. The net profit belonging to shareholders of listed companies was 48.4034 million yuan, down 76.87 percent from the same period last year. With the commissioning of the second phase of Xuzhou Peixian production line and the release of 600MW overseas battery capacity in Vietnam, the company's high-efficiency battery production capacity has been gradually increased, and the overseas market has been continuously expanded, and the component market price is expected to stabilize in the future, as well as the repair of the company's profitability.
The productivity of high-efficiency battery chips has been improved, and the business of distributed products has grown. The company already has 1000MW high-efficiency battery capacity in Peixian County, Xuzhou, and is expected to reach 2000MW battery capacity by the end of 2017; at the same time, the company's overseas 600MW battery capacity in Vietnam has been put into production to provide strategic support for the company's differentiated market development. The company seizes the opportunity of distributed photovoltaic development to establish agent channels in many provinces and cities across the country to promote "Xin Sunshine" photovoltaic household system.
Optimize photovoltaic module products and actively expand overseas markets. The P-type polycrystal double-sided double-glass module developed by the company successfully passed the product certification test of TUV Rheinland for the first time; the average efficiency of polycrystalline "black silicon + PERC" battery reached about 20.4%, the technical advantage is constantly expanding, and has begun stable mass production. Relying on the brand advantage of Xiexin, the company has set up subsidiaries in Japan, India, North America, Australia, Singapore and Germany to accelerate the expansion of overseas markets for battery chips and components.
ROE has declined slightly, and the focus of future management is to control the debt ratio. In the first three quarters of 2017, the company's ROE was 1.15%, a simultaneous decline of 4.46%; in the first three quarters of 2017, the company's ROA was 0.29%, down 0.90% from the same period last year. At the end of the third quarter, the company's asset-liability ratio was 79.36%. The 2016 annual report shows that the company's asset-liability ratio is 79.42%, and the company's asset-liability ratio is still high. At the end of the third quarter, the current ratio of the company was 1.27, and the quick ratio was 1.12. The risk of short-term debt service was higher. The net cash flow of the company's operating activities in the first three quarters of 2017 was 185 million yuan, a significant improvement compared with the same period last year.
Downgrade earnings forecast and maintain rating unchanged: based on the fierce market competition in photovoltaic modules, we carefully downgrade the company's profit forecast. The company's 17-19 net profit is expected to be 95 million yuan, 149 million yuan and 195 million yuan (before adjustment is 122 million yuan, 248 million yuan and 473 million yuan respectively), and earnings per share are 0.02 yuan per share, 0.03 yuan per share and 0.04 yuan per share, respectively. The current share price corresponds to 206x, 137x and 103x PE. Maintain the "overweight" rating.
