The company is actively responding to the impact of high-speed rail and self-driving. The company is the leader of passenger transport in Jiangxi, operating vehicles and passenger lines account for more than 30% of the province. However, due to the promotion of high-speed rail network construction and the increase of self-driving travel in recent years, the company's main passenger transport industry has been greatly affected in recent years. In the face of impact, on the one hand, the company expands branch lines, urban and rural passenger transport and urban public transport, turning disadvantages into advantages and realizing seamless links with high-speed rail. On the other hand, continue to actively carry out epitaxial mergers and acquisitions of passenger assets, and constantly consolidate and optimize the advantages of the regional network.

Lay out the logistics and tourism sectors, speed up the pace of mergers and acquisitions, and create a new core of business. This year, the company acquired Jiajie Logistics and Jingdezhen Hengda Logistics, cut into fast consumer goods logistics and commodity vehicle zero-kilometer logistics, and will be derived to do back-end supply chain logistics in the future, and the logistics business system will be gradually built. At the same time, relying on the advantages of passenger transport and building a large tourism industry with the core of "combination of transportation and travel", it has invested in three projects: Jing'an Wushu World Cultural Park, Nancheng Project and Zixi Dajue Mountain Hot Spring Resort. The pace of the company's layout of the logistics and tourism sectors has been significantly accelerated, and the pattern of business diversification has gradually taken shape, and we judge that the company may still enrich itself through epitaxial acquisitions in the future.

Analogy to Guangdong Transportation, the promotion of employee stock ownership plan can be expected. Also as a transportation enterprise, Guangdong 3399.HK has had a successful case of state reform, that is, to achieve large-scale passenger transport operation through epitaxial mergers and acquisitions of regional transport companies, and to improve operational efficiency through employee shareholding. The actual controller of Jiangxi Changyun is Nanchang SASAC, and it is the only listed company platform of Jiangxi Changyun Group, combined with the background of the current state-owned enterprise reform and the development path of the past year. The company has the possibility of continuous extension mergers and acquisitions and employee stock ownership pilot, which in turn leads to the improvement of business efficiency and profitability.

Investment suggestion: assuming that the acquired assets can fulfill their performance commitments in the next three years, the newly acquired assets are expected to contribute 66.72 million yuan in net profit in 2016. the EPS of the company from 2015 to 2017 is 0.4,0.63 and 0.78 respectively, and the valuation of the previous 15.9 yuan share price is 39.5,25,20.5 times. Combined with the current market capitalization of 3.77 billion, the target has a high margin of safety. From the background of the reform of state-owned enterprises and the process of the company's foreign mergers and acquisitions, it will be a high probability event for the company to enrich the business sector and employee stock ownership pilot through epitaxial mergers and acquisitions in the medium and long term, with a "buy-A" rating of 22.5 yuan.

Risk Tip: the performance of acquired assets is not as good as expected.