Quarterly financial data overview: the company's quarterly report for the first quarter of 2016 released on April 21 showed that during the reporting period, the company achieved operating income of 343 million yuan, an increase of 6.51% over the same period last year, while the net profit belonging to shareholders of listed companies was 31 million yuan, an increase of 9.71% over the same period last year. The main reasons for this net profit growth rate higher than revenue are: first, the holding subsidiary borrows less and pays less interest on loans, resulting in a sharp drop in financial expenses; second, the increase in government subsidies is 91.84 percent higher than the same period last year. It should also be noted that the disposal loss caused by the company's disposal of scrapped fixed assets increased significantly during the reporting period, resulting in a year-on-year increase of 1217.05% in the disposal loss of non-current assets. After deducting various non-recurrent gains and losses, including government subsidies and losses on the disposal of non-current assets, the net profit belonging to shareholders of listed companies was 30 million yuan, an increase of 6.43% over the same period last year. In addition, the net cash flow generated by the company's operating activities in the first quarter of 2016 was 38 million yuan, an increase of 236.41 percent over the same period last year, due to a decrease in cash spent on goods and services during the reporting period compared with the same period last year.

In the coming years, the reform of state-owned vanadium mining enterprises is expected to attract attention. First, it is expected that 2016 will be a bumper year, and the company's electricity generation will increase significantly, which will boost the company's revenue and net profit. Second, the "Sichuan State-owned Enterprise Reform method" and the "Sichuan State-owned Enterprise Reform Plan list schedule" have been announced one after another. Star Power may carry out a major restructuring by means of market-oriented operation, and the reform is expected to be promising. Third, Aoshenda Mining, which is controlled by the company, is rich in vanadium resources, which is of great value, and its contribution to profits can not be underestimated.

With the adjustment of electricity price policy, profits may decline. Recently, the company has received notice from the government that it will implement the electricity price adjustment policy from January 1, 2016, suspending the abundant and dry electricity prices on the sales side of Sichuan Power Grid, thermal power peak and valley electricity prices and hydropower peak and valley electricity prices on the grid side. According to the structure of purchasing and selling electricity in 2015 and the planned purchase and sale of electricity in 2016, it is estimated that this year's operating profit will be reduced by more than 1500 yuan.

Valuation and financial forecast: the company's operating income in the next three years is expected to be 13.82,15.11 and 1.642 billion yuan respectively, the net profit belonging to the parent company can reach 1.15,1.22,131 million yuan, and the EPS is 0.35,0.38,0.40 yuan respectively.

Risk tips: electricity price reduction, intensified competition in the industry, etc.