It turned a loss into a profit in 2018, and continued to be profitable in the first quarter. In 2018, the company achieved revenue of 1,095 million yuan, an increase of 15.91% over the previous year. Net profit attributable to the mother was 29.89 million yuan, turning a loss into a profit over the previous year.
Net profit for the first quarter was 3.01 million yuan, continuing to be profitable. Mainly, the company has restructured its own assets, divested some of its assets, and vigorously developed a market for metal materials products with high technical content, good market prospects, and strong profitability.
The loss-making assets were divested and 28% of the shares in Xizai Institute were purchased. The company exchanged assets and liabilities related to the Titanium Branch, Photovoltaic Materials Branch, Grinding Materials Branch, Energy Materials Branch, and related public and auxiliary facilities belonging to Dongfang Danshi with 28% of the shares held by China Dongshi Dongfang in the Ximai Institute. Among them, the Grinding Materials Branch, the Titanium Branch, and the Photovoltaic Materials Branch lost business losses, and the Energy Materials Branch made a small profit. As of November 30, 2018, the assets sold had brought a total loss of 46.7 million yuan to the listed company. China Oriental promised that Ximai Institute would achieve net profit of no less than 106 million yuan, 138 million yuan, and 175 million yuan in 2018, 2019 and 2020.
The Ximai Institute is the only research and processing base for other materials in China, and there are broad prospects for military applications. The total valuation value of Xizai Institute's total equity on February 28, 2018, on the evaluation benchmark date was 1,906 billion yuan. Currently, the Ximai Institute is the only wrinkled material research and processing base in China, and has leading R&D technology and production capacity in China. The main products are used in aerospace, nuclear industry and other fields. The customers are mainly large national military enterprises and research institutes, and the customer concentration is high. Wrinkles are widely used, but due to the scarcity of resources, priority can only be given to national defense and military industry. Currently, metal wrinkles are widely used in nuclear reactors as neutron decelerators and reflectors, especially in experimental reactors and the nuclear industry; due to the low density, high modulus, good thermal properties and high melting point of metal wrinkles, they are widely used in structural materials for various spacecraft. According to the company's promised performance, Xizai Institute's performance has improved significantly in the past two years, driving the company's performance upward.
Profit forecast and investment suggestions: The company's net profit for 2019-2021 is expected to be 0.5, 0.8, and 94 million yuan respectively; EPS is 0.11, 0.18, and 0.21 yuan respectively, and the PE corresponding to the stock price on May 29, 2019 is 65.33X, 40.62X, and 34.78X, giving ratings for increasing holdings.
Risk warning: The performance of the Institute of Western Materials fell short of expectations, but orders fell sharply