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Net Xiaobian to introduce the Shanshan stock 2014 three quarterly communique: equity incentive to enhance lithium power business, clothing business to enhance profitability.

Event: the company released the three quarterly report in 2014, and realized operating income of 2 billion 778 million yuan during the reporting period, 2.23% lower than the same period last year. The net profit attributable to shareholders of listed companies was 151 million yuan, an increase of 28.44% over the same period last year. Net profit after deducting non profits was 149 million yuan, an increase of 75.93% over the same period; and the base income per share was 0.37 yuan.

Comments:

Continue to do the business of strong and large lithium battery materials will benefit from the explosive growth of new energy vehicles.

The company is positioned as the world's leading supplier of lithium ion materials. Its products include positive and negative electrode materials, electrolyte and so on. It has entered the supply system of ATL, Li Shen, Beek, BYD and other domestic Li ion battery manufacturers.

We expect that with the explosive growth of new energy vehicles, the demand for lithium materials will continue to improve. As a leader in lithium battery materials, the company deserves attention.

The negative equity company's equity incentive effect is obvious: the board of directors adopted the motion on the scheme of stock incentive for the company's lithium battery negative material business management team, with the negative equity company's 10% equity incentive management level, the constraint condition is: Based on 2013, from 2014 to 2016, the total profit of negative profit and the average sales growth rate within three years are no less than 10%.

We believe that the company is a leading enterprise in terms of negative materials. The implementation of incentive measures is expected to promote further business development and enhance profitability, and is expected to play a better role than the positive companies (after the company's incentive to improve significantly).

Lithium business is expected to continue to grow, and investment income will ensure performance base.

On the positive side, Hunan

The production capacity of 9000 tons of lithium-ion battery cathode material has been basically completed. The annual production capacity of 15 thousand tons of cathode material production base has started construction. On the negative side, the key material project of lithium ion power battery in Shanghai continues to be promoted; in terms of electrolyte, the newly built annual output of 4000 tons of electrolyte project in Langfang, Hebei has been put into trial production, realizing the simultaneous supply of the north and South regions, which is conducive to the company's opening up to the northern market.

At the same time, the investment income in the first three quarters was 159 million 852 thousand and 500 yuan, which provided a good basis for performance.

Clothing business: stripping bad business, improving profitability, and gradually stepping out of the adjustment period.

The company recently divestied the shares of new Mingda Mingda knitwear business board, which is one of the main sources of loss in the previous garment business of the company. The divestiture is expected to significantly improve the profitability of the company's clothing business.

We expect that with the completion of business integration, garment performance is expected to improve.

Earnings forecasts and ratings: we expect

EPS in the 14, 15 and 16 years is 0.53, 0.62 and 0.73 yuan respectively, corresponding to the closing price of October 29th (19.14 yuan). The P / E ratios are 36, 31 and 26 times, respectively, and the "overweight" rating is maintained.

The company is a good investment target because of the support of the company's profit and the anticipation of the new energy vehicle and energy storage market in the future.

Stock price stimulus: Super expectation of new energy vehicle development; energy storage market startup; garment business performance exceeding expectations.

Risk factors: the promotion of new energy vehicles is lower than expected; the technology and competition risk of lithium battery materials; and the impact of garment business on performance.