Societe Generale Technology: Sales Promotion To Boost Revenue Growth, Rising Cost Costs Dragged Net Interest Rate

　　 Xingye science and technology Publish the annual report 2014. The main business achievements are as follows: during the reporting period, the company achieved operating income of 2 billion 234 million yuan, up 25.47% over the same period last year; net profit attributable to shareholders of listed companies was 120 million yuan, down 32.41% compared to the same period last year; the basic earnings per share was 0.49 yuan / share, down 32.41% compared to the same period last year, of which fourth quarter earnings per share were 0.12 yuan / share.

Event review

The investment projects were put into operation and the new subsidiaries promoted sales growth to achieve revenue growth. In 2014, the company achieved operating income of 2 billion 234 million yuan, an increase of 25.47% over the same period last year. The company's income maintained a relatively fast growth. It mainly benefited from the partial investment of Yu Andong and risson investment projects, and the sales revenue brought by the 7-12 month operation of the newly merged wholly owned subsidiary Xuzhou Xingning Co., Ltd. Among them, the fourth quarter income was 743 million yuan, an increase of 11.55% over the same period, far below the 55.76% growth rate in the third quarter.

The increase in the cost of leather materials has led to a decline in gross profit margin and an increase in the cost rate. The net interest rate is mainly imported, and the price of imported fur has led to a rise in the company. Leather material With the increase of procurement cost, the company can not spanfer the increased cost effectively to the downstream enterprises, resulting in a 5.04 percentage point decrease in the gross profit margin of the company's products, down to 12.09%. Exchange rate fluctuations make the company aggregate losses and increase the financial cost rate. During the reporting period, the company's period cost rate rose to 6.20%, dragging down the net interest rate by 4.6 percentage points to 5.37%.

The merger of Xingning leather industry increased the storage of the finished goods and increased the accounts receivable significantly with the increase of revenue. At the end of 2014, the inventory of the company was 795 million 919 thousand and 600 yuan, up by 16.33% compared with the same period last year. By the end of the reporting period, the inventory of the finished leather stock of the Xingning leather industry was increased, and the finished product skin inventory was 6 million 561 thousand and 700 square feet, an increase of 37.92% over the same period last year. Due to the increase in revenue and the increase in unsettled loans at the end of the term, the company receivable accounts for 261 million 294 thousand and 700 yuan at the end of 2014, up 35.30% from the same period last year.

Maintain "recommended" rating Tanning industry With the characteristics of high pollution, under the background of increasing environmental pressure and eliminating backward production capacity, the company as a leading enterprise will fully benefit from the regulation of environmental protection policies. Early recruitment and investment projects, the acquisition of Xingning leather industry and other continuous release of production capacity, is expected to boost market share. But the rising price of upstream raw materials and the low demand for downstream will restrict the company's performance improvement in the short term. With the decline in gross margin and the increase in costs, the net profit of our company has declined sharply. We expect the company's EPS to be 0.80 yuan and 1.05 yuan in the past 2015-2016 years, corresponding to the current stock price being 22.49 times and 17.12 times. Maintain "recommended" rating.