Core ideas:

In the first half of 2017, the operating income was 177 million yuan, an increase of 585% over the same period last year. The net profit returned to the mother was 8.76 million yuan, down 90% from the same period last year. The non-net profit deducted by the mother was 8.46 million yuan, an increase of 114% over the same period last year.

During the transition period, the real estate sales and sale of real estate business provide performance support for the company.

The company's revenue increased significantly in the first half of 2017, mainly because the revenue of the mainland production business in the reporting period was 174 million yuan, and there was no sales revenue in the same period last year. The net profit of home ownership fell 90% compared with the same period last year, mainly due to the sale of Wanze Real Estate, a wholly-owned subsidiary, in the same period last year, with a transfer amount of 271 million yuan. The company is determined to transform its superalloy business and support the company's performance through the sale of real estate inventory and the sale of real estate during the transition period.

The income of superalloy is stable, and the equipment is expected to contribute more profits after it is put into production.

In the first half of 2017, the company's income from superalloy business reached 957000 yuan, the same as the same period last year, with a gross profit margin of 30.8%. The company expects that Shanghai Fengxian polycrystal precision casting project will be put into production in 2018. In addition, the company plans to issue non-public shares and raise no more than 1.3 billion yuan for advanced superalloy materials and components manufacturing and construction projects, with Shenshan Wanze precision casting as the main implementation body. it is expected that the company's profitability will be greatly improved after the implementation of the additional issuance plan and the fund-raising project.

The domestic superalloy market is vast, the company layout in the high-end market.

In the additional issuance plan, the company estimates that by 2020, the domestic engine blade market scale is 85.419 billion yuan / year, and the master alloy market scale is 6.407 billion yuan / year, which has a broad market space. The company has many top experts in the field of aero-engine in the world, and the R & D team has reached the world's advanced level. Research layout covers basic technology research and development and engineering research and development, product layout in the high-end consumer market, with a certain degree of competitiveness.

Profit forecast and investment advice: excluding non-public offerings, the forecast company's EPS for 17-19 years is 0.16Universe 0.18Compact 0.22 yuan, corresponding to PE is 75-66-56 times. Optimistic about the future development of the company's superalloy business, but considering that the business is just in its infancy, it was downgraded to "prudent overweight".

Risk hint: the production of superalloy project is not up to expectation; the brain drain of technical team.