Main points of investment:
The company is the northeast cement leader, at the same time involved in real estate, medicine, finance and other businesses. The company has a clinker production capacity of about 20 million tons and cement distribution in the three eastern provinces, which is expected to reverse losses in 2016 compared with 2015; the pharmaceutical sector, including pharmaceuticals and large pharmacies, is stable; and it is expected that the main contribution to real estate sales in 2016 will come from projects in Tianjin and Nanjing. In addition to the main business, the company holds about 31% of Northeast Securities and 10% of Jilin Bank, and investment income is an important source of the company's performance.
The company plans to stabilize traditional industries in the future, focusing on the development of medicine and finance. In the long run, the company's cement, coal, real estate and other traditional industries will no longer do large-scale expansion and strive for stability. In the future, the layout of the pharmaceutical and financial sectors will be increased, with emphasis on the development of Yatai Pharmaceutical (the company holds a stake of about 61.4%), the further development of injections through Shenyi capsule, and the exploration of new drug layout with equal emphasis on independent development and acquisition. The distribution of pharmaceutical circulation links will continue to expand; in the financial sector, the equity proportion of Northeast Securities and Jilin Bank will not decline.
In 2017, it is expected that the revitalization of the Northeast will lead to demand and the removal of cement capacity will lead to new changes in supply. The overall cement demand in Northeast China is flat in 2016, and the Northeast Revitalization Plan in 2017, if implemented, is expected to lead to an improvement in regional demand. At the same time, under the policy environment of supply-side reform, regional cement enterprises actively explore new ways of cooperation (such as the establishment of joint venture companies), and there may be positive changes in supply.
In the future, the disposal of first-class land consolidation projects may contribute to the increment of real estate business. The company has sufficient land reserves in Wuqing District of Tianjin, and the individual projects listed in the early stage have been cut off and suspended due to excessive price increases. The disposal plan of the follow-up land consolidation project is clear, and the contribution to the increment of real estate business is worth looking forward to.
Pharmaceutical companies will lay out new drugs in the future and continue to expand the scale of large pharmacies. The main product of the company's pharmaceutical industry is Shenyi capsule; the pharmaceutical business is a big pharmacy. The company actively promotes the reserve of new drugs and acquires Jiangsu Weikell medical technology in the early stage, the latter develops Vikagra, which is used for the treatment of cardiovascular and cerebrovascular diseases, and currently ends phase 1 clinical; Yatai Pharmaceutical Research Center actively cultivates human avian influenza vaccine and rabies vaccine for vero cells. The company's Jilin pharmacy is one of the top 12 pharmaceutical businesses in the country. at present, it has more than 500 stores, and plans to expand to about 1000 in the future.
Give a rating of "overweight". The fixed increase of the company was held in December 2016, and the management shareholding platform Jinta Investment intends to participate to ensure that the original equity will not be diluted, demonstrating its confidence in the company's long-term development. The company's cement boom has been at the bottom, the future development of the pharmaceutical sector is worth looking forward to, the real estate sector may have incremental expectations, at the same time high-quality financial assets. We estimate that the company's EPS will be about 0.06,0.18,0.24 yuan per share respectively from 2016 to 2018. Give the company 1.6x PB (corresponding to the latest net assets per share of 4.47RMB / share) with a target price of 7.15RMB / share.
Risk hint. The demand for cement declined more than expected, and the transfer progress of the first-class land consolidation project fell short of expectations.