Events:
The company released its annual report for 2017. during the reporting period, the company achieved operating income of 4.161 billion yuan, an increase of 13.24% over the same period last year, a net profit of 100 million yuan, a decrease of 28.78%, and a year-on-year increase of 190.05% in cash flow from operating activities. At the same time, the company has approved a cash dividend of 0.5 yuan for every 10 shares in the first three quarters, and there will be no dividend this time.
Our comments are as follows:
The revenue of the main electric power industry increased by 10.6%, and the gross profit margin decreased by 3 percentage points. The company's products cover from medium and low voltage to high voltage and ultra-high voltage, as well as rail, wind power, civilian and other products, the brand influence is strong. The continuous optimization of the company's management is expected to effectively alleviate the impact of the rapid rise in short-term metal prices on gross profit margins.
The predecessor of the company is the key backbone enterprise of the cable industry of the former Ministry of Mechatronics, the chairman of the wire and cable industry in Zhejiang Province, and one of the few domestic enterprises capable of producing large cross-section high-voltage and ultra-high voltage cables. As the main supplier of HV and UHV cables to the national and southern power grids, the company has benefited from the continuous growth of domestic HV and UHV construction, as well as urban rail transit construction, and the company's main power industry income has increased steadily. The company optimizes product structure, seizes large orders with strong profitability, and adopts order scheduling and lean production mode, which is expected to effectively alleviate the impact of short-term rapid rise in prices of copper, aluminum and other raw materials on gross profit margin.
Fuchunjiang Optoelectronics, a veteran optical communications enterprise, was successfully acquired. During the reporting period, the optical communications business income was 360 million yuan, and the net profit was 30.13 million yuan. The company already has 9.6 million core kilometers of optical fiber production capacity, and is expected to release another 5 million core kilometers of optical fiber and 150 tons of optical rod production capacity in 19 years, promoting sustained high performance growth.
The company issued convertible bonds to acquire Fuchunjiang Optoelectronics, one of the earliest optical fiber and cable enterprises in China, and completed the merger in July. In 2017, Fuchunjiang Optoelectronics already has the production capacity of 4.2 million core km optical fiber and 5 million core km optical cable. In the fourth quarter of 2017, the 5.4 million core km optical fiber production capacity newly built by the wholly-owned subsidiary Fuchunjiang Optoelectronics (Suzhou) has reached full capacity, and the company's overall optical fiber production capacity is expected to reach 9.6 million core km in 2018. At the same time, the company can convert another investment project through Yongte Information to build 150T optical fiber prefabricated rods and supporting 5 million core km optical fiber production capacity, which is expected to reach production in 2019. Under the high business cycle of optical fiber and optical cable, the continuous release of production capacity is expected to promote the company's sustained and rapid growth.
The company and South Korean enterprises jointly built the PLC chip production line, using PLC technology platform, the cost of passive optical devices is low, the company will actively around the 5G trend in the future, the industrial chain is expected to continue to extend.
The company has built a production line with an annual output of 6000 6amp 8 wafers, producing PLC chips which are widely used in passive components, and self-packaged into a variety of passive optical device products such as PLC splitters. Mastering self-produced chips makes the company's products have more cost advantages. In the future, the company will continue to extend the optical communication industry chain around the 5G trend and pay attention to the long-term layout progress of the company.
Investment suggestion
The company's main power cable business is expected to maintain steady growth. After the successful completion of the acquisition of Fuchunjiang Optoelectronics, the company's optical fiber and cable production capacity continues to release, as well as the core optical fiber prefabricated rod production capacity, which is expected to share the high economic cycle of the optical communications industry. Capacity release is expected to promote rapid short-term performance growth, optical fiber preform to achieve mass production, the company's profitability will be further improved. It is estimated that the company's net profit from 2018 to 2020 will be 3.01,4.52 and 677 million yuan respectively, maintaining the "overweight" rating.
Risk hint: new technology research and development risk, power business raw material price increase more than expected