2016 performance in line with expectations
Jiulian Development announced its 2016 results: operating income was 3.385 billion yuan, up 7% from the same period last year; net profit belonging to the parent company was 62 million yuan, down 23.7% from the same period last year, corresponding to 0.19 yuan per share, in line with the previous performance forecast. Of this total, the revenue in the fourth quarter was 1.483 billion yuan, and the net profit of YoY+145%,QoQ+134%, was 42 million yuan, an increase of 50 million yuan over the same period last year, and an increase of 173% over the previous quarter. At the same time, the company plans to pay a dividend of 0.4 yuan for every 10 shares.
The company expects to return to its mother in the first quarter of 17, with a net profit of about 08 million yuan, turning a loss into a profit.
Trend of development
The continuous increase in investment in PPP projects is expected to lead to a turnaround in the company's business. The amount and quantity of PPP projects signed in Guizhou Province ranks first in the country, and the total investment of PPP projects in Guizhou Province exceeded 1.5 trillion by the end of 2016. The company's blasting construction technical service is in the leading level in China, and the local competitive advantage is obvious as a state-owned enterprise in Guizhou Province. with the continuous increase of PPP project investment in Guizhou Province, the company's blasting engineering business orders are expected to increase rapidly.
In addition, the central enterprise background of Poly Group, the controlling shareholder, also helps to enhance the company's competitive advantage and obtain more orders nationwide. The company announced in January that it had won the bid for infrastructure and public service projects in Zunyi City, with a bid value of 2.07 billion yuan, accounting for 61% of the company's business income in 2016. the project is expected to take 2 years of construction and 8 years of operation.
The private explosive assets of the controlling shareholders are expected to be fully injected into listed companies. Jiulian Group, the controlling shareholder, has signed an equity transfer agreement with the trader, and Jiulian Group has promised to inject it into the listed company within 2 years after the completion of the integration of Panjiang Chemical. In addition, Poly Group's 100% stake in Poly Chemical, 70% stake in Shandong Yinguang and 50.6% stake in Poly Minbao Technology will also be injected into listed companies. As the integration platform of civil explosive assets of Jiulian Group, the company will further enhance the concentration of domestic civil explosive industry in the future.
Profit forecast
As the investment in the PPP project is expected to lead to an improvement in the company's business, we have raised our 2017 earnings per share forecast by 10% from 0.22 yuan to 0.24 yuan. The introduction of 2018 EPS is expected to be 0.28 yuan.
Valuation and suggestion
At present, the company's stock price corresponds to the 18-year profit forecast of 2017Compact, which is 660.59x respectively. Due to the downward valuation, we maintained a neutral rating, but lowered the target price by 10.0% to 18.00 yuan, which is 11.66% upside from the current share price. The target price corresponds to the 2017 / 18 74ax 65x Pmax E.
Risk
The price of civil explosive products dropped, and the order was lower than expected.