Event: on January 26, the company issued the revised Annual performance Forecast for 2016, which pointed out that the net profit is expected to be 86 million yuan to 97 million yuan in 2016, an increase of 132.88% and 162.67% over the same period last year.
Comments:
UHV construction is beneficial to the insulator industry. 2016 is the first year of the country's 13th five-year Plan. The outline of China's 13th five-year Plan shows that in addition to the 12 transmission channels for the prevention and control of air pollution, power transmission channels such as southwest, northwest, North China and Northeast China should be built to realize the coordinated development of power grids at all levels. In implementation, the State Grid Corporation plans to invest 2. 5%. 7 trillion yuan, build the eastern and western synchronous power grids by 2020, complete 22 UHV AC and 19 DC projects, and accelerate the upgrading of the distribution network. The above shows that the overall investment in power grid construction will increase in the next five years, the investment allocation will be inclined to the intelligent and high-grade direction, the electrical equipment enterprises will face a rare market opportunity, and the insulator industry is still in a period of strategic opportunity. At the same time, in 2016, the company successively won the bid for four lines from Ximeng-Taizhou, Shanghai Miao-Shandong, Yuheng-Weifang and Zhalut-Qingzhou, with a cumulative amount of about 320 million yuan. Won the bid Zalut-Qingzhou UHV project porcelain insulators 95.8 million yuan, Zalut-Qingzhou project bidding porcelain insulators a total of 4 packets, delivery date is December 30, 2016. Dalian electric porcelain, as a leading enterprise in the insulator industry, will fully benefit from the market opportunities brought about by UHV construction.
Sales of suspended porcelain insulators and composite insulators have doubled, effectively ensuring high performance growth. Because of its complex production process and huge investment, suspended porcelain insulators have set up higher technical and financial barriers for the industry, and the threshold for entry in the UHV field is even higher; therefore, for a long time in the future, the high-end market of suspended porcelain insulators, especially the UHV market, is still relatively stable. With the rapid development of national electric power construction and the rapid rise of glass and composite insulator manufacturers, the industry competition pattern of porcelain insulator, glass insulator and composite insulator has been formed.
Now there are only four high-end ones, and the industry standards are high. From the point of view of winning the bid, Dalian electric porcelain has been in the leading position. In the first half of 2016, revenue from suspended porcelain insulators and composite insulators increased by 179.5% and 369.09% respectively over the same period last year, and gross profit increased by 7.99% and 7.2% respectively. From a regional point of view, domestic sales increased by 114.78% over the same period last year, gross profit increased by 11.55% over the same period last year, foreign sales increased by 87.62%, and gross profit increased by 5.64%, which advantageously ensured the high growth of performance.
The change of the actual controller will open up the diversification space of the company. In March 2016, the former major shareholder of the company transferred 40 million shares, accounting for 19.61% of the company's total share capital, and the transferee was Funing Yilong Magnetic Materials. Its actual controllers Zhu Guancheng and Qiu Suzhen have a number of rare earth reserves, separation, processing and magnetic material production-related assets, the future business structure adjustment of listed companies is expected to be strong, the company is expected to achieve a multi-main business parallel model, will open up the company's diversified development space.
Profit forecast. In the context of the continuous release of UHV construction and the change of actual controllers, the company's business scale continues to expand and is expected to usher in sustainable growth. The forecast company's EPS for 2016-2018 will be 0.48,0.57 and 0.70 respectively, and will continue to be rated "overweight" in view of the current high share price.
Risk hint
UHV construction is not up to expectations.