Turning losses into profits, the full-year performance is in sight.
2016H1 benefited from the hot property market in Hefei, its performance was successfully reversed compared with the same period last year, and the semi-annual report data was eye-catching. Affected by the accelerated carry-over of the Hefei Amber Fifth Ring City and Accord projects, the company achieved an operating income of 1.164 billion yuan in the first half of the year, a substantial increase of 360.77% over the same period last year. During the reporting period, the company recorded a gross profit margin of 19.17%, mainly due to the low gross margin of the Fifth Ring City and Accord projects. The level of the company's three fees improved significantly in the first half of the year, of which the reduction in financial expenses was the most obvious, which was mainly due to the adjustment of the company's debt structure and a significant decline in interest expenses, while sales expenses increased slightly due to the increase in project publicity expenditure. Thanks to the sharp increase in revenue and the effective reduction of three fees, the company achieved a net profit of 67 million yuan in the first half of the year, a year-on-year growth rate of 419.35%. In the first half of the year, the company received 2.86 billion yuan in advance, an increase of 25.55% over the same period last year, and is expected to make a profit this year and next.
Ploughing Hefei deeply and enjoying the opportunity of urban development
The company actively distributes the Hefei market and replenishes the land reserve. The company laid out the surrounding areas of Hefei ahead of schedule and purchased plot [2016] No. 6 in Hefei and plot E1606 in Yaohai District in April and June respectively. Feixi block is adjacent to Feixi County Hospital, with Rongchuang and other large housing enterprises stationed in Feixi County, the regional value can be expected; Yaohai block is adjacent to Hefei Shizhong New District, belonging to the subway property, the plot has significant advantages. Affected by first-line capital spillover, insufficient supply and relatively low prices, house prices in Hefei soared in 2016, with a cumulative increase of 56.58% from January to September, ranking second in the country. Hefei transactions plummeted under the influence of the National Day purchase restrictions, but considering that the policy goal is still "slow" rather than "turn", at the same time, as the provincial capital city and the deputy center of the Yangtze River Delta urban agglomeration, the property market can still be optimistic for a long time.
Complete the national reform and enjoy the financial control platform exclusively
The company completed the equity transfer in March, and the direct controlling shareholder was formally changed to Hefei Xingtai Holdings Group Co., Ltd. Xingtai Holdings is the only financial control platform among the three major state-owned holding platforms planned by Hefei SASAC. The scope of business covers banking, securities, insurance, guarantee, asset management, equity trading, trust, fund, leasing, pawn, hotel and property management and many other financial institutions, such as Jianxin Trust, Huishang Bank, Guoyuan Securities, Huafu Fund, Guoyuan Agricultural Insurance and so on. In the first half of 2016, Xingtai Holdings realized total assets of 31.076 billion yuan and net assets of 10.483 billion yuan, of which financial assets exceeded 80%. As the only listed company under the platform, Hefei Urban Construction has a transcendent position. In the future, high-quality state-owned assets in the platform may be expected to be capitalized by injecting into listed companies; and the company's performance growth is also full of possibilities through the help of diversified resources in the financial control platform.
Profit forecast and valuation
At present, the company's revenue is accelerated, the three fees and expenses are improved, the land reserve is sufficient, and the regional advantage is significant. After the completion of the national reform, the company's regional financial control platform is unique and has a lot of room for imagination. We predict that the EPS from 2016 to 2018 will be 0.56 yuan per share, 0.73 yuan per share and 0.84 yuan per share, and the corresponding PE will be 33 times, 26 times and 22 times. At present, the corresponding RNAV for the company's real estate business is 14.39 yuan, but considering that the company already has the attribute of financial control platform, it will be given a rating of "increasing holdings".