Incident: The company announced that it published its three-quarter report: it achieved revenue of 453 million yuan in the first three quarters of 2016, an increase of 4.38% over the previous year (previous value +32.50%); realized attributable net profit of 90 million yuan, an increase of 17.27% over the previous year (previous value - 34.59%); EPS was 0.47.
Performance increased slightly and high gross margin continued: 1) Slight growth in performance: the company achieved revenue of 453 million yuan in the first three quarters of 2016, up 4.38% year on year (previous value +32.50%), revenue growth fell 28.12 pc from the same period last year; realized attributable net profit of 90 million yuan, up 17.27% year on year (previous value: -34.59%). Net profit attributable for the whole year is expected to exceed 150 million yuan; 2) Continued high gross margin: the company's overall gross profit margin during the reporting period was 93.5%, down 1.30pc from the same period last year, mainly because its share of revenue was still 93.5%, down 1.30pc from the same period last year, mainly because its share of revenue was still 93.5%, down 1.30pc from the same period last year. The larger The decline in the gross profit level of traditional online marketing services reflects a trend of increased competition for traditional trading services. At the same time, trading services in the narrow sense are also paying more and more attention to results orientation. There will still be a certain backlog in the future. In the future, more and higher requirements will be placed on the company's offline services and professional abilities; 3) Low leverage and stable capital: During the reporting period, ROE was 9.35%, which was basically stable from the same period last year; the balance ratio was 16.96%, an increase of 0.49 pc over the same period last year; the capital in hand was over 600 million. Furthermore, the company was recognized as a high-tech enterprise and can be enjoyed continuously for three years after being recognized as a high-tech enterprise The preferential corporate income tax rate was 15%, so corporate income tax expenses during the reporting period were reduced by 43.48% compared to the previous period, increasing the company's net interest rate to a certain extent.
The “3+1" system is gradually improving: in recent years, the company's business has gradually sought to develop from new housing, second-hand housing transaction brokerage, advertising and other services in the narrow sense to a real estate service system that “extends from transactions to the integration of real estate finance, leasing, and asset management”, including actively constructing “residential” services based on platforms such as “365 housing scavenging”, Internet home services based on platforms such as “decorating a treasure house” and mobile lifestyle services based on the “urban mobility matrix”, plus financial services running through the entire business chain described above.
Small loans are operating well, and the financial service product line has been extended: the company's Internet finance sector has been greatly affected by the tightening of P2P regulations since this year, but in the first half of the year, the gross margin of the Internet financial platform business still increased by 52 pcts, and extension expansion progressed steadily; in January of this year, the company announced that it plans to invest a total of 280 million shares to establish a small loan company (accounting for 80% in total). The small loan company's loan balance by the end of the reporting period had reached 360 million yuan.
Major asset restructuring is being promoted, and it is proposed to acquire “target companies that specialize in investment and asset management”: On September 7 this year, the company announced that it had applied for suspension of trading due to planning important matters. According to the announcement, the company plans to use cash or cash plus targeted issuance of additional shares to acquire all of the shares of the target company for main investment and asset management, with an investment amount of 200 to 300 million dollars; it was announced again on the 23rd that the “expansion of the scope and amount of related transactions exceeded expectations” had met the major asset restructuring standards and was transferred to a major asset restructuring process; as of now, this major asset restructuring matter is still in progress.
Investment suggestions: The company continues to have low leverage, stable capital, and high gross profit. In recent years, business exploration has been actively carried out in stock housing, leasing, asset management, etc., and the product line has been extended. Currently, the company is promoting major asset restructuring matters of “acquiring companies whose main investment and asset management targets”. Follow-up actions are worth paying attention to; we expect the company's 2016-2018 EPS to be 0.80, 1.03, 1.37, corresponding to the current stock price PE multiplier of 38.8X, 30.1X, 22.6X, maintaining the “buy-A” rating, and maintaining the “buy-A” rating for six months. original.
Risk warning: profit decline, new business performance falls short of expectations