Event
On November 8, the company announced that it signed a "capital increase agreement" with China Cultural Industry Development Group and Sino-Indian Culture in Beijing. Sino-Indian Culture will increase its registered capital to 60 million yuan, and the increased registered capital of 30 million yuan will be paid by the company. after the capital increase, the company and China Cultural Development Group will each hold a 50% stake in Sino-Indian Culture, and the company will consolidate its financial statements.
Main points of analysis
Wenfa Group has a profound accumulation to create a platform for cultural creation and park operation: China Wenfa Group is a company under the central enterprise China Guoxin holding Co., Ltd., which is directly under the State-owned assets Supervision and Administration Commission of the State Council. It mainly lays out printing and publishing, park development and operation and cultural industry investment. Among them, the park development and operation section has built cultural zones such as "Xinhua 1949" capital cultural and financial industry agglomeration area, "people's Art" cultural park and "hundred flowers" architectural design park in Beijing. Chinese and Indian culture is a professional platform for China Wenfa in cultural and creative industry consultation, park operation and resource integration.
The company is based on commercial real estate development and has rich experience in operation: according to the third quarterly report of Nanguo Real Estate, the company's operating income of Q1-3 in 2016 reached 1.78 billion yuan, an increase of 87.9 percent over the same period last year, and the net profit returned to its mother was 10.64 million yuan, an increase of 109.2 percent over the same period last year. The company's projects are mainly distributed in Wuhan and Nanjing, where the real estate market is better. Thanks to the recovery of the real estate market, the inventory value has increased significantly, and the performance has increased significantly compared with the same period last year. The company is based in Wuhan, with commercial real estate as the guide to carry out a variety of property types of comprehensive development. By the end of 2015, the company's commercial floor area in operation exceeded 700000 square meters, with an average occupancy rate of more than 95%.
The joint force of Chinese and Indian culture, commercial real estate + cultural model can be expected: after the completion of this capital increase, the board of directors of Sino-Indian culture is composed of five members, of which China Wenfa Group has the right to nominate two candidates for directors. Nanguo Real Estate has the right to nominate three candidates for directors, and the chairman of Chinese and Indian culture is a director elected by Nanguo Real Estate. The signing of this capital increase agreement marks the gradual landing of the company's early strategy, as the company relies on China Power Construction Real Estate, a major shareholder, the advantages in resources and mature experience in the development of commercial real estate will help the company to make joint efforts in Sino-Indian culture and common development in the field of commercial real estate and cultural industry.
Investment suggestion
Considering the progress of the company's real estate development and settlement this year, we maintain our previous profit forecast and expect the company to achieve EPS0.22, 0.29 and 0.35 yuan in 2016, with a "buy" rating corresponding to the previous share price of 25, 19 and 16PE.
Risk hint
The carry-over speed of real estate projects is lower than expected; the synergistic effect of commercial real estate and culture is not obvious.