Events:
The company publishes its annual report for 2016. In 2016, the company achieved operating income of 1.252 billion yuan (+ 14.14%), net profit of 829 million yuan (+ 1.53%), earnings per share of 0.80 yuan (+ 1.53%), and weighted ROE of 17.12% (- 1.87pct).
Comments:
1. The performance of the main business exceeded expectations, offsetting the decline in investment income
In 2016, the company achieved operating income of 1.252 billion yuan (+ 14.1%). Among them, the expressway main business performed beautifully, realizing toll income of 1.034 billion yuan (+ 10.71%), an increase of 2.23 pct; financial leasing income of 172 million yuan (+ 37.7%) and factoring income of 22 million yuan compared with 8.48% in the first half of the year.
The company realized a gross profit of 820 million yuan (+ 16.6%) and a gross profit margin of 65.49%, an increase of 1.38 pct over 15 years. The decline in the stock market dragged down the investment income of Dongguan Securities, and the company achieved a net investment income of 288 million yuan (- 32.2%), of which 227 million yuan (- 34.3%) was invested in joint ventures and joint ventures, 1.013 billion yuan (+ 4.4%) in operating profit and 829 million yuan (+ 1.53%) in net profit.
2. Toll policy adjustment + economic recovery, tolls increased by 10.7% over the same period last year.
The company's road products include Dongguan-Shenzhen Expressway Phase I, Phase II, Phase III Dongcheng Section and Longlin Expressway, and is entrusted with managing the Shijie Section of Phase III of Dongguan-Shenzhen Expressway, with a total mileage of about 61.26 km. Li-Shen Expressway, located in the hinterland of the Pearl River Delta, is an important part of the Pearl River Delta Ring Road in Guangdong Province, and has become an important fast channel connecting Guangzhou, Dongguan and Shenzhen. The company also shares 11.11% of Humen Bridge (including investment income).
During the reporting period, 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 highway expanded to 18.04% on the basis of an increase of 10.91% in 2015. At the same time, due to the implementation of national standard charges in the reporting period, the reclassification and adjustment of vehicle types and the implementation of full weight charges for trucks in terms of charging policy have led to a higher proportion of growth of first-class cars and five types of vehicles on the basis of natural growth, reaching 22.63% and 38.09% respectively.
According to quarterly statistics, the toll revenue of all lines of Dongguan-Shenzhen Expressway in 2016 increased positively compared with the same period last year, with the highest increase in the third quarter of 2016 (up 13.77%), which also became the highest toll quarter in history. According to the year-on-year statistics of 2016, toll revenue decreased by 1.76% month-on-month in the fourth quarter of 2016 due to the impact of free access during the National Day period.
3. The performance of financial leasing business is strong, and the proportion of revenue increases.
During the reporting period, the company's financial business sector achieved a total operating income of 194 million yuan, operating profit of 94 million yuan and net profit of 78 million yuan, up 41.04%, 54.35% and 70.72% respectively over the same period last year. Among them, Rongtong Leasing realized operating income of 172 million yuan, operating profit of 85.0441 million yuan and net profit of 71.8119 million yuan, up 24.64%, 39.75% and 56.89% respectively over the same period last year. Since its establishment in September 2016, Hongtong factoring has successfully implemented commercial factoring represented by educational factoring, with operating income of 22.0229 million yuan, operating profit of 8.8833 million yuan and net profit of 6.6622 million yuan.
4. The performance of the securities market is weak, and the investment income has dropped sharply.
The company realized a net investment income of 288 million yuan (- 32.2%), of which 227 million yuan (- 34.3%) was invested in joint ventures and joint ventures. The main shareholding companies are Humen Bridge (11.11%) and Dongguan Securities (20%).
Among them, Humen Bridge realized operating income of 1.508 billion yuan (+ 6.7%), net profit of 982 million yuan (+ 9.8%), and contributed investment income of 67.33 million yuan (23.4%). Dongguan Securities, a shareholding company, realized operating income of 2.233 billion yuan (- 40.7%), net profit of 836 million yuan (- 42.7%) and contributed investment income of 158 million yuan (54.9%). The decline in profits of Dongguan Securities is the main reason for the decline in investment income of the company.
5. Profit forecast and valuation
We forecast that the annual EPS of the company in 17-18-19 will be 0.87,0.97,1.08 yuan respectively, corresponding to the previous PE 16.6max 14.8max 13.3X. The company's main business reversal + financial holding platform + state-owned enterprise reform triple catalysis to maintain the "strongly recommended-A" investment rating.
6. Risk hint: the macroeconomic decline exceeded expectations.