Incident: The company released its 2016 annual report. From January to December 2016, the company achieved operating income of 1,605,7057 million yuan, an increase of 34.16% over the same period last year; net profit attributable to shareholders of listed companies was 144,3481 million yuan, an increase of 159.92% over the same period last year; the company plans to use capital reserve to transfer 20 shares per 10 shares to all shareholders, with a dividend of 0.50 yuan (tax included) for every 10 shares.
The merger of Golden Shipping led to a sharp increase in performance, and the military and civilian integration strategy is beginning to bear fruit. In 2016, the company entered the marine life saving and special equipment sector through the acquisition of 100% of the shares in Jinhaiyun, which led to a significant increase in performance after the merger. Golden Shipping has second-level confidential qualifications and has four military certificates. The gross margin of its main products, high-performance polymer materials and naval and air equipment, is as high as 60%. With sufficient plans and on-hand orders for 2017, it is expected that exceeding the performance promise will be a probable event. Furthermore, in June 2016, the company signed a “Framework Agreement for Entering the Park” with the Taizhou Pharmaceutical High-tech Zone Management Committee to invest in the establishment of the first domestic civil-military integrated technology industrial park within the industrial park. We believe that the company's military and civilian integration strategy is already beginning to bear fruit. In the future, it is expected that Golden Shipping will be used to enter the military auxiliary ship field, turning the maritime defense equipment business into a new profit growth point.
Inefficient asset disposal is advancing at an accelerated pace, and the clean energy business continues to improve. In 2016, the company disposed of 51% of Jiayu Environmental's shares, 100% of the Yacht Club's shares, and 50% of the Suzhou Yacht Club's shares, and cancelled Nantong Jiahao Ruida Marine Technology Co., Ltd. By disposing of the assets of these loss-making subsidiaries, the company has not only accumulated experience in the subsequent disposal of inefficient assets, but also laid a good foundation for sustainable and healthy development in the future. In addition, the company actively exploited the clean energy application market. Combined with the process of increasing smog and haze remediation efforts and adjusting the structure of the energy industry in the Yangtze River Delta region, the company achieved a significant increase in gas business revenue in 2016 compared to last year. Furthermore, the company is actively developing LNG refueling business based on the existing natural gas fueling business and planning a joint venture with CNOOC Zhejiang Natural Gas Utilization Co., Ltd. to establish “CNOOC (Shanghai) Jiahao New Energy Co., Ltd.”, which will help enhance the core competitiveness of the clean energy business.
Profit forecast and investment rating: The company's net profit for 2017-2019 is estimated to be about 241 million yuan, 340 million yuan, 451 million yuan, EPS is 0.63 yuan, 0.88 yuan, 1.17 yuan, and corresponding PE is 40 times, 29 times, 22 times, giving a “buy” rating.