Shanshan shares: net profit in the first quarter increased by more than 66%

Shanshan shares expect net profit in the first quarter of this year to increase by 55 million Yuan to 75 million Yuan compared with the same period of the previous year, an increase of 65.93% to 89.91%. The main reason for the pre-increased performance of this period is that the operating performance of the company's lithium battery materials for the positive and negative electrodes increased year-on-year, while the operating performance of the new energy vehicle business decreased year-on-year. According to the previously disclosed 2017 annual report, during the reporting period, the company's operating results achieved steady growth, achieving operating income of 827.054 million Yuan, an increase of 51.07%; achieving net profit attributable to shareholders of listed companies of 896,161,100 Yuan, a year-on-year increase 171.42%; realized net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses of RMB 441,262,300, an increase of 72.07% over the same period of last year. Mainly due to the year-on-year growth in the operating performance of the positive electrode business of lithium battery materials in the current period, the net profit attributable to shareholders of listed companies was 487,266,700 Yuan, an increase of 179.54% over the same period of last year, and the company's sale of some shares of Ningbo Bank held investment income of 46,583.81 Ten thousand Yuan.

Huachuang Securities believes that since 2016, Shanshan has entered a clear balance sheet repair process, mainly reflecting the loss of assets and the gradual weakening of assets unrelated to the new energy business, while the funds in hand will increase lithium battery materials. The investment and integration of the upstream and downstream of the industrial chain is used to amplify the competitiveness of the company's quality assets and contribute to the company's profits. In terms of valuation of the income statement, it is expected that Shanshan’s 2018 business operations (lithium materials, energy management, new energy vehicles, and apparel manufacturing related businesses) are expected to achieve profits of more than 700 million Yuan, a year-on-year growth rate of more than 40%. The valuation of the corresponding operational assets is about 20 times. In terms of balance sheet, Shanshan's current PB is only 2.15 times, far below the industry leading level, and there is significant room for repair of equity assets.

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