2017 the net profit of homing increased by 99.60% and 1Q2018 by 72.61%

The company released the annual report for 2017 and the quarterly report for 2018: 2017 of the company realized operating income of 3.686 billion yuan, an increase of 10.03% over the same period last year; realized net profit of 87.25 million yuan, equivalent to 0.17 yuan of fully diluted EPS, an increase of 99.60% over the same period last year; and realized deduction of 32.52 million yuan of non-return net profit, a significant increase over the 9943 yuan realized last year. The 2017 results were below the lower limit of the company's previous range of 117.32% year-on-year growth of 163.07%.

1Q2018 realized operating income of 1.251 billion yuan, an increase of 12.26% over the same period last year; realized net profit of 36.46 million yuan, equivalent to 0.07 yuan of fully diluted EPS, an increase of 72.61% over the same period last year; and realized net profit of 30.77 million yuan, an increase of 267.36% over the same period last year. The company expects the net profit of 1H2018 to change from 0.3% to 34.34% compared with the same period last year, and the corresponding net profit is 56 million yuan to 75 million yuan, mainly due to the increase in income scale and the reduction of financial expenses caused by loan repayment.

2017 the comprehensive gross profit margin increased by 0.01%, and the expense rate decreased by 1.84% during the period.

In 2017, the company's comprehensive gross profit margin was 10.27%, an increase of 0.01 percentage points over the previous year; the expense rate during the company period in 2017 was 7.77%, down 1.84 percentage points from the previous year, of which the financial expense rate decreased greatly due to the repayment of loans and the reduction of interest expenses, down 1.69 percentage points from the previous year.

1Q2018's consolidated gross profit margin was 8.56%, down 0.79% from the same period last year; 1Q2018's period expense rate was 5.93%, down 1.66% from the same period last year.

Benefiting from the recovery of gold, the income of major categories has recovered significantly.

The good sign of recovery on the revenue side of the company is mainly due to the recovery of sales of gold jewelry and mosaic ornaments, in addition to the warming factors of the industry, the company's active launch of products for younger and personalized needs has also played a positive role in the strengthening of the company's brand influence and the recovery of income levels. In order to further enhance the competitiveness of products, the company invested in the establishment of Zhejiang Mingpai Jewelry Technology Co., Ltd., engaged in new product research and development.

Raise profit forecast and maintain "neutral" rating

Taking into account the recovery of the company's revenue and the impact of investment returns on good housing in Suzhou, we raise our forecast for the company's fully diluted EPS in 18-19 to 0.23 / 0.25 yuan (previously 0.13 / 0.14 yuan), and add 0.29 yuan to 2020. The company has a high valuation and maintains a "neutral" rating.

Risk hint: the growth rate of household consumption is not up to expectations, and the market recognition of new products is not up to expectations.