Event: the company released its annual report and 2017 quarterly results forecast, as well as a non-public offering plan to raise no more than 750 million yuan for rail transit vehicle industrialization construction and other projects.
Revenue grew steadily and gross profit margin was basically flat: the company achieved operating income of 822 million yuan in 2016, an increase of 8.05% over the same period last year, mainly due to the substantial increase in sales in wind power, home appliances and other industries; gross profit margin was 28.5%, basically the same as the same period last year; the net profit returned to the mother was 18.19 million yuan, down 22.4% from the same period last year, mainly due to the increase in the provision for bad debts of accounts receivable and the provision for inventory price decline. Affected by the seasonality of the industry, the company expects a loss of 9 million yuan to 6.5 million yuan in the first quarter of 2017, a loss of 3.5% less than the same period last year.
The fixed increase project is invested in rail transit and other projects, and the industrial chain extends downstream: the company plans to raise no more than 750 million yuan in non-public offering to invest in rail transit construction projects, hard structure foam expansion projects and high-performance core materials projects. The rail transit project will help the company enter the downstream rail transit field, quickly form a large-scale production of rail transit vehicles and build a new profit growth point, and the hard structure foam expansion project will expand the company's existing production capacity. high-performance core material projects provide continuous power for the company's future business development. We believe that the company actively extends the industrial chain downstream, in line with the future development trend of the industry, and open up the growth space of the company.
After the employee stock ownership purchase is completed, the major shareholder equity tends to be concentrated: the first phase of the company's employee stock ownership plan was completed a few days ago, with a transaction amount of 53.27 million yuan, with an average price of 12.73 yuan per share, with a lock-up period until December 28, 2017, indicating the company's strong confidence in future development. In addition, Mr. Wu Haizhou, a major shareholder, has accepted 1536 million shares of the United actors through Shengyan Investment, and the proportion of shares held by the actual controller has increased after the transfer, which we believe is conducive to the implementation of the company's future strategies.
Investment suggestion: do not consider this non-public offering plan for the time being. It is estimated that the EPS in 2017-19 will be 0.12,0.12,0.14 yuan respectively. We believe that Tiansheng Xinliao downstream extension project has broad prospects, covering for the first time, and giving an investment rating of-A, with a 6-month target price of 14 yuan.
Risk hint: lower-than-expected growth