Main points of investment:
With the sale of Easy GO shares, Letv's influence on Xingke Electronics has been gradually digested. On December 14, the company announced that Xingke Electronics would transfer its 4110991 Easy Go shares (about 2/3 of its total Easy Go shares) to TWC at a price of 225 million yuan. Prior to this, Lucky and Wu Meng, related parties of Letv Mobile, repaid 325 million yuan of Xingke Electronics debt by way of equity transfer, and the Easy Go shares held by the company originated from solving the debt problems of Letv Mobile and Xingke Electronic Technology. After the transfer of Easy GO shares, most of Xingke's claims were successfully recovered in cash, and the influence of Letv has been gradually digested. The company expects the impact of this equity transfer on net profit in 2018 to be about 7 million yuan.
The business of modified plastics is growing steadily and ranks as the leader in the industry. The company ploughs the modified plastics industry, and the main industry has grown well in the past two years, mainly due to the increase in capacity utilization year by year, while increasing the research and development and promotion of new products and high gross profit products. According to the 2017 semi-annual report, the operating income of modified plastics was 825.1913 million yuan, an increase of 49.72% over the same period last year, and a gross profit of 159.4036 million yuan, an increase of 62.98% over the same period last year. The company expects full-year net profit range of 2.2-240 million yuan, an increase of 43.90-56.87% over the same period last year.
Lithium electric metal raw materials accurate layout, cut into the new energy industry chain. On September 26, 2017, the company established Dongguan Yinxi Cobalt Co., Ltd. to enter the field of new energy batteries. On October 18, the company signed the Strategic Cooperation Framework Agreement with Huaxin Co., Ltd. (Democratic Republic of the Congo). Huaxin participated in helping the company and its holding company to find target mines, make every effort to guarantee the company's annual supply of raw materials equivalent to 3000 tons of cobalt ore, while solving the problem of export quota of gold from the Congo. The company takes cobalt resources as the entry point in the field of new energy materials, and will continue to explore and layout upstream and downstream based on the company's main business materials field in the future, so as to cultivate new business growth points.
Xingke electronic business is improving, and the future development is worth looking forward to. Xingke Electronics is mainly engaged in the R & D, production and sales of CNC metal precision structural components, which is one of the few domestic manufacturers with the full process capability of CNC, and its main products are metal appearance parts of consumer electronic products such as smartphones. In 2016, the company acquired the remaining 66.20% stake in Xingke Electronics, achieving 100% holding, which was consolidated in March 2017. In order to reduce the influence of Letv, the company immediately adjusted its strategy to upgrade and transform to diversified customers and products.
At present, Xingke Electronics mainly provides CNC process services for A products and mobile terminal brand products such as OPPO, Hammer, Meitu and XIAOMI, and CNC process services for a best-selling brand TV.
Profit forecast and investment rating. The business of traditional modified plastics is growing steadily, and the fields of new energy and CNC are about to make efforts. We estimate that the net profit of the company in 17-19 is 2.24,3.23 and 416 million yuan respectively, and the EPS in 17-19 is 0.44,0.64 and 0.82 yuan respectively. The company is in the period of business development, and its performance may fluctuate greatly, so it will not be rated for the time being.
Risk tips: core customer loss; product prices fall.