1Q17 performance meets expectations
Ketai Power announced 1Q17 results: operating income of 211 million yuan, an increase of 17.6% over the same period last year; net profit belonging to the parent company was 7.97 million yuan, an increase of 2.1% over the same period last year, corresponding to a profit of 0.02 yuan per share. The company's generator income is growing steadily and its performance is in line with expectations. The decrease in gross profit margin (1.4ppt) was mainly due to the exchange rate impact of generator raw material procurement and increased competition; the decrease in sales / management expense rate (5.2/4.0ppt) was mainly due to the divestiture of subsidiary Jetstar; the increase in financial expense rate (2.0ppt) was mainly due to increased interest expenses and exchange losses; and the loss of asset impairment was 5.56 million, mainly due to an increase in bad debt provision compared with the same period last year, which was a drag on performance growth.
Trend of development
With the rapid growth of generator sets, the gross profit margin will be slightly under pressure. Sector revenue grew by 27% in 2016. Orders performed well in the first quarter of 2017, revenue continued to grow, and it is expected to continue to expand market share in the data center sector. In overseas markets, the Hong Kong Ted acquired by the company is expected to contribute more than 5 million yuan in net profit in 2017. However, as competition intensifies and engine imports are affected by the exchange rate, product gross margins will decline.
The electric logistics vehicle operation project is about to start. The company plans to issue no more than 64 million shares and raise no more than 812.6 million yuan for the new energy logistics vehicle operation project. In 2017-19, 11000 electric logistics vehicles and 5500 charging piles will be operated, and an intelligent operation and management platform will be built. The project is expected to have an IRR of 14.44% and a payback period of 4.7 years. Although the company's car purchase cost has risen after the subsidy has gone downhill, the company's leasing business will advance steadily and is expected to promote about 3000 vehicles in 2017, given the cost advantage of electric cars and the strong demand of express delivery companies for electrified replacement of logistics vehicles. At the same time, the company will continue to invest in the new energy vehicle industry chain, which is expected to provide performance flexibility in the future. However, as the industry is in a period of policy adjustment, the fixed increase still needs the approval of the general meeting of shareholders and the Securities Regulatory Commission, and the company's logistics vehicle business is still uncertain.
Profit forecast
We keep our earnings per share forecast for 2017 / 2018 unchanged.
Valuation and suggestion
At present, the share price of the company corresponds to 2017 Universe, 74 Placement, 18 years, and 50x Pax E. We maintain a neutral rating and a target price of 13.88 yuan, which is 5.83% lower than the current share price. Based on the segment valuation method, the target market capitalization is 4.44 billion yuan, corresponding to 2018 48x Pmax E. If there is a fixed increase in issuance, there is a risk of dilution of performance in the short term.
Risk.
The promotion of electric logistics vehicle operation has slowed down; overseas business expansion is lower than expected.