This report is read as follows:
The performance in 2016 is in line with market expectations, which is lower than our previous expectations. The cash flow of the main fur business is good and is expected to recover in 17 years; online celebrity e-commerce begins to contribute investment income and is optimistic about the development of new e-commerce business in the future. Maintain the overweight rating.
Main points of investment:
The performance is in line with market expectations and the overweight rating is maintained. In 2016, the revenue was 502 million yuan (- 11.50%), the net profit was 15.07 million yuan (- 16.61%), and the dividend for every 10 shares was 0.10 yuan. 16Q4 has a revenue of 160 million yuan (- 1.87%) and a net profit of 6.4 million yuan (- 36.22%). The full-year performance is in line with market expectations, which is lower than our previous expectations, mainly due to investment income and non-operating income falling short of expectations. It is expected that the company's investment income in the online celebrity e-commerce sector will grow slowly in the future, with a downward adjustment of 2017-18 EPS to 0.11 0.19 yuan (the original value 0.26 0.52), and an estimated EPS of 0.26 yuan in 2019. Market risk appetite declined, lowering the target price to 20 yuan, corresponding to 18 years 105 times PE, increasing the rating.
Fur business revenue and performance growth improved, cash flow picked up; online celebrity e-commerce business began to contribute profits. 1) it is expected that there will be restorative growth in the main industry in 2017: the income growth rate of the main fur industry in 2016 fell by 11.5%, and the income growth rate of the main fur industry fell by 2%, but improved from-32% in the past 15 years; the net operating cash flow increased by 2%; and the turnover days of accounts receivable decreased by 3 days. 2) online celebrity e-commerce business began to contribute investment income: Youshe Technology, which participated in shares, turned a loss into a profit in 2016, with a net profit of 2.02 million yuan. At the same time, Youshe Technology continues to expand the e-commerce territory of online celebrities: holding Zhejiang Guangcan Network; participating in Zhengzhou winning Fan, a cosmetics supply chain company, and Beijing Zhi Meili, a picture and video content company.
It is optimistic that the company will continue to increase its new e-commerce business. We believe that the company's future growth will be driven by new businesses such as e-commerce. The company announced on March 30 that it intends to invest 120 million yuan to build an e-commerce incubator with an area of 50,000 square meters. After the completion of the e-commerce incubator project, the e-commerce supply chain, suppliers and logistics providers will be managed and technical guidance will be provided through sales and leasing modes, as well as distribution channels and warehousing services. The layout of the company's e-commerce industry has fallen again.
Risk tips: affected by animal protectionism, fur exports are depressed; investment returns are lower than expected.