1. Event
Volkswagen reported that operating income in the first three quarters of 2013 increased by 12.6% year-on-year to 2.166 billion yuan, net profit after deduction increased by 50.76% to 210 million yuan, and net profit belonging to shareholders of listed companies decreased by 4.07% to 350 million yuan compared with the same period last year. basic earnings per share is 0.22 yuan, basically in line with our expectations.
two。 Our analysis and judgment
2.1. The main business continues to improve as a whole
In the first three quarters of 2013, operating income (excluding interest income on small loans) grew by 6.7%, 13.1% and 17.9% respectively compared with the same period last year. The net profit belonging to the shareholders of the parent company also increased quarter by quarter, and the company's main business as a whole continued to improve. In the case of the decline in the profitability of the taxi business, the reason for the improvement in the profitability of the main business this year may be due to the settlement of real estate projects, good revenue from car sales, and the gradual operation of the renovation of Volkswagen buildings.
2.2. Small loan business continues to develop
Interest income in the third quarter of 2013 increased slightly by 2.9% to 37.28 million yuan compared with the second quarter. However, loans and advances reached 1.108 billion yuan at the end of the third quarter, up 43 per cent from the end of June. It is estimated that the newly established Jiading small loan at the end of May may gradually expand its business from the third quarter, and is expected to contribute more revenue and profits from the fourth quarter. In addition, Hongkou Volkswagen, a wholly-owned subsidiary of the company, signed a contract on October 15, 2013 to jointly invest in the establishment of Minhang small loan. It is expected that the small loan business will still develop rapidly in the future.
2.3. Prudent disposal of financial assets available for sale
In the first three quarters of 2013, the company realized an investment income of 112 million yuan (before tax) on the disposal of available financial assets, significantly less than the 269 million yuan (before tax) in the first three quarters of 2012. According to the operating condition of the main business, the company steadily grasps the progress of the release of investment income.
3. Investment advice: recommendation, asset revaluation and business transformation
The company's sound earnings management is in line with our assumption in the report "assets are undervalued and profitability is to be released". Taking into account the expansion of the small loan business, we slightly raised our EPS forecast for 2013-2015 to 0.26 PE 0.26 yuan, which is 23.8 times the corresponding PE. We continue to recommend the stock for the following reasons: 1. The main business other than taxis has been doing well since 2013; 2. Guotai Junan securities equity and other assets revaluation potential is still there; 3. Under the background of the state-owned assets reform in Shanghai, the business transformation of labor-intensive industries may be accelerated.
4. Risk hint
Taxi business profits fell too fast; Guotai Junan Securities failed to list smoothly.
