Main points of investment
# event: Xiangjiang Holdings released its 2015 report. According to the company's pro forma profit statement, the company's revenue in 2015 was 4.212 billion yuan, down 22.71% from the same period last year; the net profit returned to its mother was 390 million yuan, an increase of 7.54% over the same period last year; and basic earnings per share was 0.33 yuan.
Comments:
The injection of assets began to contribute to the performance, which slightly exceeded expectations. According to the company's pro forma profit statement, the company achieved 4.212 billion yuan in revenue in 2015, down 22.71% from the same period last year; the net profit returned to its mother was 390 million yuan, an increase of 7.54% over the same period last year. In 2015, the company purchased shares in Hong Kong Commercial and other companies through private placement, realizing the cross-industry association of listed companies and group assets. Through strategic transformation, the company has enhanced its strength and competitiveness, enriched the company's business, and laid a solid foundation for sustained performance growth in the future.
The real estate business has grown steadily and the land reserve has been further expanded. In 2015, the real estate company achieved a settlement area of 307000 square meters and a settlement income of 2.902 billion yuan. In 2015, the company realized the contracted sales area of 329400 square meters and the contracted sales amount of 3.133 billion yuan, an increase of 9.8% and 16.0% respectively over the same period last year. Among them, the commercial housing in the trade and logistics base achieved a contracted sales area of 97200 square meters, with a contracted sales amount of 920 million yuan; residential sales achieved a contracted sales area of 232200 square meters, with a contracted sales amount of 2.213 billion yuan. By the end of 2015, the total construction area of the company's land reserve was about 5.48 million square meters, an increase of 10.7 percent over the end of last year.
The net interest rate and asset structure have improved significantly. In 2015, the company achieved a gross sales margin of 42.8% and a net sales margin of 7.8%, an increase of 6.9 and 2.2 percentage points respectively over the same period last year. Over the past 15 years, the company has successfully implemented private shares to significantly enhance the company's financial strength, at the same time, the real estate business sales rebate is good, the company's asset structure has been greatly improved, and the net debt ratio has dropped significantly to a relatively low level of 18.3%.
Management grants stock incentives to effectively enhance cohesion and combat effectiveness. Major shareholders are rich in resources and attach importance to the listing platform. Management recently granted the first stock incentive, a number of 24.48 million, accounting for about 3.19 per cent of the equity (770 million shares) when the plan was signed, unlocked on the condition that the relative growth rate of non-net profit in 2016-2018 was not less than 82 per cent, 99 per cent and 120 per cent. Stock incentive helps to enhance the cohesion and combat effectiveness of the management of the company. As the only listing platform of major shareholders, Xiangjiang Holdings has also been highly valued by major shareholders.
Investment advice: the company began to contribute to its performance by injecting assets in 2015, and the performance slightly exceeded expectations. Major shareholder resources continue to support the development of the company, equity incentives effectively enhance cohesion and combat effectiveness. We estimate the company's RNAV at 11.50 yuan. We raise the company's profit forecast and expect EPS to be 0.38,0.49 and 0.58 yuan respectively from 2016 to 2018, corresponding to 18.4,14.3 and 12.1 times PE respectively, maintaining the "buy" rating.
Risk tip: sales rebounded less than expected.
