The company released the 2016 third quarterly report: In the first three quarters of 2016, the company achieved operating income of 11.182 billion yuan, up 4.78% year-on-year; net profit attributable to shareholders of listed companies was 182 million yuan, up 5.18% year-on-year, corresponding to EPS 0.18 yuan The performance is in line with our expectations. In the third quarter, the income realized in the single quarter was 4.015 billion yuan, and the net profit attributable to the shareholders of the listed company was 77.25 million yuan, an increase of 24.14% year-on-year.
In the third quarter, the average price of ferrosilicon fell, the cost of coal-fired power generation increased, and the gross profit margin decreased slightly by 2.05 percentage points year-on-year. In the third quarter, prices of ferrosilicon, silicomanganese, and PVC of the company’s main products all rose significantly compared with the second quarter, but due to the fact that ferrosilicon prices in the third quarter were still about 6% lower than the same period of last year, plus the installed capacity of company-owned power plants increased. Some of the coal needs to be purchased from outside, and gross profit margin in the single quarter slightly decreased by 2.05 percentage points year-on-year.
After the Mid-Autumn Festival, the price of electro-metallurgical products rose sharply again. In the fourth quarter, it entered the peak season of cashmere apparel consumption, and the performance will usher in an outbreak. After the Mid-Autumn Festival, ferrosilicon, silicomanganese and PVC products prices rose sharply again. On October 28, ferrosilicon went up by 1,125 yuan per ton, silicomanganese rose by 2,150 yuan per ton, and PVC rose by 1,050 yuan per ton, a significant increase from the previous month. More than 2 quarters. This round of price increase is mainly driven by rising costs. In the case of significant increases in upstream manganese mines, electricity, coal, silica, and freight, the industry as a whole can only choose to follow up. The increase in electricity, silica, freight, and other costs is due to policy and seasonal factors, with a lower probability of decline in the short- and medium-term. Coal and manganese ore are constrained by supply constraints, and prices are difficult to be adjusted back. Under cost support, we believe that products in the fourth quarter The price will remain high. The company has a complete set of self-provided power plants, and Mitsui, a joint venture partner of the Electrometallurgical company, is also a shareholder of BHP Billiton (BHP). The main cost of electricity and manganese ore has a strong cost advantage over the industry. With the increase in product prices, and entering the peak season of cashmere apparel consumption in the fourth quarter, the company's performance will usher in an outbreak.
Maintain profit forecast and maintain “buy†rating. Downstream demand improved to stimulate the price of ferroalloys, PVC and other products, the company's "recycling economy" model has strong advantages in raw material reserves, power costs, will fully benefit from rising product prices, the fourth quarter results will usher in an outbreak. We maintain the Company's EPS of RMB 0.46, 0.60, and 0.71 for 16-18 years, which corresponds to 22 times, 17 times, and 14 times for PE, respectively, and maintain the “buy†rating.
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