The decline in the company's financial costs has led to a great increase in the probability of exceeding expectations over the past 15 years. The company's venture capital, trust and other sectors should refer to the valuation standards of similar listed companies. After calculating the market capitalization according to the profitability and valuation criteria of each sector, we believe that the reasonable market value of the company should be between 18 billion and 18 billion, which is still more than 50% of the closing price on March 18.
First, the sharp increase in performance in 2014 led to a decline in valuations, and there is a higher probability of exceeding expectations this year.
The company's valuation is low: due to the sales recognition of the real estate business and the increase in long-term equity investment income, the company has announced a year-on-year increase of 90-130% in 2014, with a net profit of 7.5-911 million yuan. The valuation corresponding to the closing price on March 18 is only 11-14 times. According to the TTM performance of Wande in 2014, the PE valuation of Zhongyuan Expressway in 23 stocks is the seventh from the bottom, and the PB valuation is the fourth from the bottom. It is obviously the low-priced stocks in the low-valuation plate.
The subsidy superimposed financial expenditure has declined, and the performance in 2015 is expected to continue to grow: due to the reconstruction and expansion of Zhengzhou Airport Expressway, the company announced on January 29th that it will receive a total of about 562 million yuan in land acquisition and demolition fees (169 million yuan has been received so far). If all confirmed in the 2015 fiscal year, it will have a significant impact on the company's performance (improvement). In addition, the amount of investment in infrastructure fixed assets of the company is relatively large, and the asset-liability ratio and financial cost have been relatively high. The quarterly report of 2014 shows that the company's long-term loan amount is as high as 16 billion yuan, and the debt ratio is as high as 81%. The financial expenses incurred in the first three quarters are 918 million (nearly 1.3 billion yuan on an annual basis, the same as in 13 years). Under the environment of gradual decline in market interest rates in 2015, the company's interest expenditure will be moderately alleviated. In addition, the company announced on March 17th that it would add no more than 34 million preferred shares and intend to raise 3.4 billion yuan to repay 2.6 billion debts and replenish 800 million working capital. it is expected that the company's financial expenditure will drop sharply in 2015, and the probability of the company's performance exceeding expectations will be further enhanced.
Second, the company is undervalued.
The value of the company is at a low ebb: the company has sectors such as venture capital, trust, insurance, banking, real estate and highway. according to the profitability and net assets of the venture capital, trust and banking sectors, with reference to the valuation of listed companies in the same sector, the valuation of the three is close to 12.7 billion yuan, while the total market capitalization of the company is only 10.5 billion as of March 18, which means that the assets of the company's real estate, high-speed (15-year improvement) are not counted.
Henan first financial control platform: the company holds 33% of Zhongyuan Trust, 9.92% of Kaifeng Bank and Xinxiang Bank (which will be planned to set up Central Plains Bank through the two banks). At the same time, 200 million shares were invested in the establishment of Central Plains Agricultural Insurance (approved by the Insurance Regulatory Commission), which is expected to move towards the whole financial platform in the future.
The free trade zone promotes the value of real estate: recently, Henan plans to declare the free trade zone in Zhengzhou, Luoyang and Kaifeng. Henan Yingdi Real Estate Co., Ltd., which is controlled by the company, owns land in Zhengzhou. Henan high-speed real estate shares also have projects in Zhengzhou and Luoyang. If the free trade zone is approved, the value of related land and property will be significantly increased.
Profit forecast and investment advice. The company benefits from a sharp drop in financing costs and an increase in investment income from venture capital and trust companies. The company's 2014-2016 net profit is expected to be 8.9,10.4 and 1.16 billion respectively, equivalent to 0.4,0.46 and 0.51 yuan EPS respectively. We divide the company's business into venture capital, trust, banking and other (real estate + high-speed) four parts. with reference to the valuations given by similar listed companies to PE 60X, PB 3X, PB 1.2X and PE 10X respectively, the overall reasonable market value of the company should be between 160X and 18 billion, corresponding to the 15-year EPS valuation of 15.4-17.3times, with a "buy" rating for the first time, with a target price of 7.6yuan.
Risk hint. China's economic growth is lower than expected.