Steady business growth, in line with expectations
The company's 2016 operating income was 1.25 billion yuan, year-on-year + 14.14%; net profit was 829 million yuan, + 1.53% year-on-year; net assets were 5.1 billion yuan, + 11.29%, + 11.29%, + 1.53%. The main business indicators of the company show a steady growth attitude, and the main reason why the growth rate of net profit is lower than the growth rate of revenue is the sharp decrease in investment income. The company plans to pay a cash dividend of 3 yuan (including tax) for every 10 shares, with a total dividend of 310 million yuan, without any increase in equity.
Steady growth of road and bridge tolls and actively expand the layout of highways
The expressways operated and managed by the company are all in Dongguan, with a total length of about 61.26km. The company earned 1.034 billion yuan in tolls in 2016, + 10.71% of the same period last year. Driven by factors such as the continuous growth of the number of private cars in the Pearl River Delta region, the integration of Shenzhen and Shenzhen, and the renovation of toll-evading cars on the provincial network, the volume of hybrid vehicles on the whole line of Li-Shen high-speed has increased by 18.04%, which is + 7.13pp compared with the same period last year. The gross profit margin of the fee-based business reached 66.12%, an increase in 2.18pp compared with the same period last year. The company plans to participate in the capital increase and share expansion of the East Ring Expressway, the main line of the East Ring Expressway is about 37.68km, with a toll life of 25 years, which is expected to be completed in 2019. If the capital increase and share expansion is completed, the company will become the absolute controlling shareholder of Yuanlong Company, a construction unit of the East Ring Expressway, with a shareholding ratio of not less than 51%. The investment of the East Ring Expressway will greatly enhance the sustainable profitability of the company's road and bridge business.
The growth rate of leasing business is eye-catching, and factoring business is quickly profitable.
Rentong Leasing promotes business development in the areas of infrastructure, public transport, medical education and manufacturing enterprises, with operating income of 172 million yuan in 2016, + 24.64% year-on-year, net profit of 71.8119 million yuan, + 56.89% year-on-year, and gross profit of 54.65%. The company plans to raise 1.4 billion yuan through a non-public offering to increase the capital of Rentong Leasing, which will significantly improve the competitiveness of the leasing business and broaden the business market. At present, the plan has been examined and approved by the CSRC and has yet to be formally approved. Since its establishment in September 2016, Hongtong factoring has focused on engineering construction, medical education, warehousing enterprise supply chain and other areas. it has achieved operating income of 22.0229 million yuan and net profit of 6.6622 million yuan in 2016, and has begun to make a profit. the synergy with the resources within the group will be more obvious in the future.
Dongguan Securities IPO is approaching, which is expected to greatly increase the market capitalization.
The company holds a 20% stake in Dongguan Securities, and Dongguan Securities is queuing up for IPO. With the accelerated pace of IPO issuance, it is expected to be listed this year, which will greatly improve the investment income of the company. Affected by the fluctuation of the secondary market and the decline in market trading volume in 2016, Dongguan Securities achieved operating income of 2.233 billion yuan and net profit of 828 million yuan, down 40.70% and 42.75% respectively. It is expected that the market will be stable in 2017, and the performance of Dongguan Securities will be stable, bringing stable performance contributions to the company.
There are broad prospects for the reform of state-owned enterprises and maintain the rating of "increasing holdings".
The company is the only state-controlled listed company in Dongguan, and it also participates in 6% of Dongguan Trust, 5% of Changan Village Bank, 20% of Songshan Lake small loan Company, etc., and the business development is relatively stable. With the acceleration of the reform of state-owned enterprises, there is a large expectation of asset integration in the future. We are optimistic about the prospect that the company will continue to improve the financial control layout and transform to a regional financial control platform on the basis of stable cash flow contributed by road and bridge tolls. From 2017 to 2019, the EPS is expected to be 0.75,0.89 and 1.13 yuan respectively, using the segment valuation method, the target price range is 16-18 yuan per share, maintaining the "overweight" rating.
Risk hint: the fixed growth process is not as expected, the national reform process is not as expected, and the risk of market volatility.