Main points of investment
What happened: we attended the 2016 performance presentation held by Tianbao Group in Hong Kong on March 8, at which the management made a statement of the company's performance and communicated with investors.
The increase in product sales contributed to a substantial increase in performance. Operating results of Tianbao Group in 2016: revenue increased by 14.5% year on year to HK $2.583 billion, and gross profit margin increased to 20.5% from 17.3% in the same period last year. Net profit rose 52.1% year-on-year to HK $194 million, with earnings per share of HK19.4 cents (compared with HK16.7 cents in the same period last year). The board recommended a final dividend of HK3.5 cents (plus the interim dividend of HK2 cents, a cumulative dividend of HK5.5 cents for the whole year, with a dividend yield of 28.3% and a corresponding dividend yield of about 3.25%). The improvement in operating results in the current period is mainly due to the continued expansion of product sales and the increase in gross profit margin.
The product sales portfolio has been optimized and the comprehensive gross profit margin has continued to rise. In 2016, the company's telecommunications products division benefited from the increase in domestic smartphone market share, especially the sharp increase in orders for OPPO-branded mobile phones, with revenue up 13.18% to HK $1.152 billion, and revenue from the industrial power tools smart charger and controller business increased by 31.59% to HK $618 million. Benefiting from the fact that the product portfolio focuses more on high gross margin products and cost and quality control, the gross profit margin of all products has basically increased, and the comprehensive gross margin level has increased by 3.17 percentage points to 20.47%. We believe that the company continues to focus on high gross margin products and the continuous introduction of new products is conducive to maintaining the high gross margin product portfolio, so there is still room for the company's comprehensive gross margin to continue to improve.
Continuous research and development of new products, through the sharing craze two-wheeled electric car charging piles are expected to detonate the market. Tianbao Group is a leading one-stop intelligent power solution provider, producing more than 1400 kinds of switching power supplies and more than 300 kinds of intelligent chargers and controllers. The company continues to develop new products and seek diversified product business opportunities. The company's newly developed charging piles for two-wheel electric vehicles have been supplied to customers, which is the first of its kind in China, and is expected to grow explosively with the promotion of the shared electric vehicle market in the future. We believe that continuous product innovation is the biggest highlight of Tianbao Group.
Our point of view: Tianbao Group, as a leading one-stop intelligent power solution provider in China, seizes the opportunity of increasing domestic mobile phone market share, orders have increased significantly, and its performance is expected to continue to grow rapidly.
The company continues to develop and launch new products, and carry out production capacity layout in the international market, laying the foundation for performance growth. According to the company's production capacity improvement plan, we expect the company's revenue to grow by more than 20% in 2017. the company's latest product, two-wheel electric car charging piles, is expected to detonate the market through the boom in the sharing economy. Investors are advised to pay active attention to it.
Risk tips: economic downturn, reduced product orders; fierce competition in the industry, a decline in gross profit margin.
