Key points of investment
The decline in performance was reversed. Jiantao Chemical (0148.HK) 2016 interim operating results: revenue of HK$18.32 billion, up 11.2% year on year; gross profit of HK$3.59 billion, up 48.9% year on year; net profit of HK$1.72 billion, up 71.0% year on year; basic EPS increased from HK$0.861 to HK$1.468, and interim dividend increased from HK$0.2 to HK$0.3 billion in the same period last year.
The subsidiary turned a loss into a profit, and the printed circuit board business regained its upward trajectory. In the first half of 2016, the company's printed circuit board (PCB) business achieved revenue of HK$3.66 billion, an increase of 6.8% over the previous year. The restructuring of the subsidiary Elianda has basically been completed. Net profit increased from 3.3 million US dollars in the same period last year to 1.5 million US dollars, turning a loss into a profit. It is expected that sales will increase further in the second half of the year. In addition, orders from brands such as Kehui Circuit Co., Ltd. and Yangxuan Electronics Co., Ltd., which are owned by the company, are also steadily rising.
Real estate projects have entered a harvest period. In 2016, H1, the company's real estate business achieved explosive growth, with revenue of HK$4.74 billion, an increase of 220% over the previous year. The main reason for this is that the company's real estate projects have entered the leasing and sale stage, and some sales of the 3 real estate projects have been recorded. It is expected that real estate projects will maintain the sales growth rate in the second half of the year, and profit margins will increase steadily as housing prices rise. Furthermore, the first phase of the company's Shanghai Jiantao Plaza project will be completed in the second half of the year, which is expected to become a new growth point for the company's performance.
Our view: We expect the company to continue the good business performance of the first half of the year in the second half of the year. As the fruits of real estate projects are harvested and new projects are completed, the company's real estate business is expected to continue to explode. Furthermore, the subsidiary Elianda has completed restructuring and is moving forward lightly, which is expected to drive steady growth in the company's printed circuit board business. Currently, the company's stock price corresponds to about 6-7 times the PE in 2016, so investors are advised to pay due attention.
Risk warning: The profit of the subsidiary Elianda falls short of expectations; production of copper-clad panels falls short of expectations; the risk of fluctuations in the real estate market.