Event: on February 24, 2017, the company released its performance KuaiBao, with a total operating income of 896 million yuan in 2016, an increase of 9.29% over the same period last year, and a net profit of 94 million yuan, an increase of 112.58% over the same period last year, corresponding to an EPS of 0.19 yuan. KuaiBao met expectations.
Comments:
Excellent performance in steel pipe business, looking forward to new nuclear power projects: the company's rapid growth this year is mainly due to the excellent performance of its subsidiary ZTE Energy equipment in the energy engineering pipe market and the reduction in financial costs.
The company's HVAC general contracting business, dragged down by the trough of the nuclear power industry, has performed poorly in recent years, and the company has entered the subway sector with a market share of 30 per cent. Construction of eight nuclear power units may start this year. If the relevant construction is launched, the company, as the domestic nuclear power HVAC leader, will also be the first to benefit. ZTE has more than 70 per cent market share in the nuclear power pipeline business and will also benefit from the resumption of nuclear power.
Exclusive access to military nuclear power qualification, opening up a new space for military nuclear power: the company is the first in the industry to obtain the "military nuclear safety equipment design license" and the "military nuclear safety equipment manufacturing license" manufacturers, including offshore floating nuclear power plants, nuclear submarines and other related products downstream market. As the military nuclear safety equipment has high industry access barriers, the company is expected to enjoy the relevant orders in the future.
3D printing is "the last kilometer" from the market: the company's heavy metal 3D printing technology has completed all routine physical and chemical experiments, and the relevant equipment and products have the conditions to be pushed to the non-nuclear market, and are in close communication with a number of heavy industry enterprises. At present, the company is actively carrying out the final neutron irradiation experiment, which, once successful, will provide a new option for the manufacture of large-scale nuclear power equipment, which can not only greatly reduce the manufacturing cost, but also shorten the construction period of the nuclear power plant by 0.5 years. The investment cost of nuclear power plants has been significantly reduced.
Investment advice: we expect the company's revenue to grow by 9.3%, 18.0% and 24.4% respectively, and net profit to grow by 112.7%, 35.5% and 47.1% respectively from 2016 to 2018. The company is given an investment rating of Buy-A for the first time, with a six-month target price of 17.49 yuan.
Risk hint: the development of nuclear power during the 13th five-year Plan is lower than expected; the industrialization of 3D printing is blocked.
