Event 1:
Jilin Liyuan Refining Co., Ltd. and Jiangsu Nanal Chuangjia Metal Co., Ltd. signed a "product purchase and sales contract", the total contract amount is about 180 million yuan, the contract is valid for one year.
Event 2:
Shenyang Liyuan and Shenyang Fuchuang formally signed the processing and Strategic Framework Agreement, with a contract amount of about 250 million yuan, accounting for 8.25% of the company's audited operating income in 2017.
Event 3:
The trial production of the prototype rail vehicle originally planned to be completed before and after the Spring Festival in 2018 was due to the situation that the individual parts suppliers inspected earlier were unable to deliver parts for the company due to force majeure, resulting in many delays in the trial production of the prototype vehicle. According to the current situation, the trial production of the complete rail vehicle sample of the company's Shenyang subsidiary is expected to be completed by the end of July 2018.
Main points of investment:
Traditional business orders are growing steadily, and the widening aluminum price gap at home and abroad is conducive to exports. The company announced on May 1 that Jilin Liyuan newly signed a contract with a total amount of about 180 million yuan, accounting for 5.94% of the company's 2017 revenue, and the company's traditional aluminum business orders increased steadily. In addition, affected by United's sanctions, the gap in overseas electrolytic aluminum will further expand in 2018, and the weak aluminum price outside and inside will also become the norm, which is conducive to the export of domestic aluminum enterprises. Although the direct customers of Liyuan Refining are concentrated in China, the portion of trading companies that are purchased from Liyuan and resold overseas accounts for a certain proportion. We believe that there will be a shortage of overseas electrolytic aluminum in 2018. Aluminum prices are expected to grow rapidly under the situation of strong on the outside and weak on the inside.
The supplier problem delays the progress of the vehicle and does not change the long-term investment value of the company. We believe that the repeated delay in the trial production plan of the company's sample car is mainly due to the fact that the order of the company's sample car is small for upstream suppliers, and some suppliers need to make abrasives for parts separately for Liyuan, which is low profit and time-consuming. The supplier's enthusiasm is low, so the supply is delayed. However, at present, the company has given a detailed trial production schedule of the sample car, and the trial production work is expected to complete the declaration of compliance in July, highlighting the company's confidence. In addition, after the sample car passes the inspection, Liyuan is expected to obtain the vehicle production license, after which the company can directly bid for the vehicle order.
Maintain the buy rating. The company has obvious regional advantages and strong operating ability. at the same time, it continues to optimize the product structure and expand to high processing fee products. In 2018, the company's traditional aluminum business may grow rapidly under the aluminum price pattern of being strong outside and weak inside, but considering that the process of the whole vehicle has been delayed, we slightly downgrade the company's profit forecast for 2018-2020, the reduced EPS is 0.59,0.85,0.96 yuan respectively, and the PE of the corresponding stock price is 13.77,9.59 and 8.48times respectively. Considering that the company can get the production license to bid after the trial production of the sample car in July, and the current valuation of the company is low, we maintain "buy".
Rating.
Risk tips: the risk of macroeconomic downturn, the risk of sharp fluctuations in raw material prices, the risk that Liyuan orders in Shenyang are not as expected, and the uncertainty of the company's export business.
