Incident: The company announced a fixed increase plan: it plans to issue shares to CCCC Real Estate Group to purchase 100% of its shares in CCCC Real Estate and 20% of Zhongzhu Zhaojia's shares, 30% of Zhongfang Suzhou shares, 49% of Zhongfang Tianjin's shares, 30% of Chongqing Jiarun's shares, and Chongqing Jiahui's 30% shares. At the same time, it is proposed to raise 4.25 billion yuan of supporting capital from CCCC Group and Wenzhou Dexin to issue shares.
Asset strength increased dramatically, additional lockdown conditions: 1) Asset strength increased dramatically: The estimated value of the asset subject to this transaction was 6.43 billion yuan, with an estimated value-added rate of 28%, which was 376% of the company's net assets at the end of 2015. The target asset's net equity profit in 2015 was about 130 million yuan (net profit before restructuring was only 0.3 billion yuan), and equity revenue was 160 million yuan. 2) Raising supporting capital: In addition, it is proposed to raise 4.25 billion dollars of supporting capital for project investment and debt repayment, and the company's operating capacity will be significantly improved. After the fixed increase is completed, the company's share capital will increase from 297 million shares to 1,176 million shares, and the actual controller of the company remains unchanged; 3) Additional lockdown conditions: After the transaction is completed, in addition to guaranteeing a 36-month lockdown period, the majority shareholders also promise that if the company's closing price falls below the issue price for 20 consecutive trading days within 6 months or when the closing price at the end of the 6-month period falls below the issue price, the lockdown period will be automatically extended by 6 months.
Abundant extracorporeal estate resources and continuous injection can be expected: 1) The beginning of the major integration of the three major platforms of CCCC: As mentioned in our previous report, CCCC Group currently owns the three major real estate platform companies of China Real Estate, CCCC Real Estate, and Greentown Real Estate, and is currently beginning a major integration with the domestic real estate platform to CCCC Real Estate; 2) The Group's only real estate business platform: After this transaction, CCCC promised that the company will be the only domestic real estate business development platform in the future, with the remaining mutual real estate business under CIC Construction 3) Complementing Greentown's advantages: After the company is integrated, it will have two listings at home and abroad at the same time The platform, even if the two places are not integrated in the short term, CCCC's land resources and Greentown's commercial operation capabilities complement each other very well, and will push the company to the next level.
The central real estate enterprise set sail to benefit from a small-cycle recovery in real estate: 1) The company will mainly deploy second-tier and higher-quality third-tier companies: after the company's restructuring is completed, it will mainly deploy second-tier and higher-quality third-tier land reserves, and resource endowments are expected to exceed 5 million square meters; 2) Short-term benefit cycle recovery: The company's 2016 quarterly report showed revenue of 164 million yuan, an increase of 80.45% over the previous year. The company's settlement revenue is expected to exceed expectations this year.
Investment suggestions: The company's fixed growth plan was implemented, and the integration of the CCCC real estate platform began. The company's assets and resource endowments increased dramatically, and at the same time benefited from short-term real estate recovery. The company's first-quarter sales increased dramatically, and annual settlement revenue is expected to reach another level. Without considering restructuring, we expect the company's 16-18 EPS to be 0.14, 0.16, and 0.19 respectively. The PE multiples for the stock price corresponding to the suspension period were 97.8X, 87.9X, and 72.6X; the company, as a rare landmark resource with a small market value with state-owned capital reform endowments, group resources Catalysis brought about by deepening integration It is expected to continue, and we will keep our “Buy-A” rating and target price of 17.6 yuan unchanged.
Risk warning: Long-term increase in revenue and profit in the real estate business, the plan approval cycle is too long, etc.