Main points of investment:
Event: the company achieved operating income of 800 million yuan in 2016, + 5.26% year-on-year; net profit attributable to shareholders of the parent company was 10.71 million yuan,-1.03%; net profit after deducting non-recurring profits and losses was-41.7 million yuan, loss + 44.29% year-on-year.
Travel agencies contribute most of their income, and income from financial management and asset disposal supports performance.
The company's travel agency received a total of 261602 people in 2016, + 2.68% compared with the same period last year, driving travel agency business revenue by + 9.08%, accounting for 3.21 pct to 91.57% of the company's revenue. Among them, due to the increase in the proportion of outbound travel business, the company's gross profit margin slightly increased 0.36pct. Hotel revenue is-23.78% compared with the same period last year, mainly due to the fact that the company will rent out the new Guanghua Hotel and Northwest Hotel, driving the gross profit margin of the hotel sector to increase by 8.5 pct. The period fee is + 11.37% compared with the same period last year, which leads to the increase of the period expense rate (0.64pct). Non-recurring gains and losses led to a turnaround in the company's performance, of which investment income increased by 33.8281 million yuan, or 441.99%, over the same period last year, mainly due to the increase in the company's financial income in the current period compared with the same period last year, and received 8 million yuan in compensation for demolition.
The new business is still in the advancing stage, and it is difficult to have a new profit point in the short term.
The planning and design scheme of the Qinling OUTLETS project has been preliminarily determined, the main body of the Olai store and characteristic commercial street has been capped, and the serviced apartment has completed foundation earthwork excavation and pile foundation testing. The Shengli Hotel project has obtained the "State-owned Land Certificate", "Construction Project Planning permit" and "Construction Land Planning permit", and has completed the examination and approval of the general plan. As of the date of disclosure, the company has determined the construction general contractor through bidding. The Weishui Park project is discussing and cooperating with a number of organizations to build a small town of OUTLETS.
Extension expansion is the only way for a company to develop.
Due to the lack of high-quality tourism resources and low market competitiveness, the development path to promote industrial transformation and upgrading through mergers and acquisitions is still the only development path, but we need to wait time to give the company more room for development. It is estimated that the EPS from 2017 to 2019 will be 0.05,0.05,0.05 yuan. Refer to the average PB of companies in the same industry, give a buy rating of 4.9x PB in 2017, corresponding to the target price of RMB16.75RMB.
Risk tips: macroeconomic downside risks; natural disaster events; extension progress is not as expected.