Main points of investment:
Announcement / news: Chutian Expressway released its 2016 annual report, with revenue of 1.273 billion, an increase of 3.41% over the same period last year, a gross profit of 65.38%, an increase of 2.15 points over the same period last year, and a net profit of 390 million, a decrease of 9.12% over the same period last year. The basic earnings per share is 0.27 yuan, and the weighted average ROE is 9.0%, a decrease of 1.6 percentage points over the same period last year. Slightly lower than expected, mainly due to the increase in income tax during the reporting period.
With the rise of the central economy, the income of high-speed business has increased steadily. In terms of high-speed business, the company now has three expressways, Hanyi, Dasui and Huangxian, with a total length of 419.22 km. Hanyi Road, the main section of which has a good performance, achieved 29.1732 million vehicles in the whole year, an increase of 10.11% over the same period last year, and revenue of 1.083 billion, an increase of 2.51% over the same period last year, contributing 85% of the total income. With the development of Wuhan economic circle, Hanyi Expressway is expected to contribute profits continuously and steadily. Dasui and Huangxian Expressway are still in the cultivation period, and their income reached 34.87 million and 88.95 million respectively during the reporting period, an increase of 15.42% and 8.58% respectively over the same period last year. We believe that with the improvement of the regional traffic network in Hubei, Dasui and Huangxian still have a high growth.
Miki intelligently merges tables smoothly and has broad prospects for the development of electronic manufacturing business. On January 24, Miki Intelligent realized the transfer of ownership, which officially became a wholly-owned subsidiary of Chutian Expressway, thickening profits and opening up new possibilities for future transformation. On the one hand, according to the prep profit forecast, Miki will make a profit of 118 million in 2017, which will directly increase the overall profit volume of the company; on the other hand, the acquisition of Miki Intelligence has added the main electronic hardware manufacturing industry for the company. at present, Miki Intelligence's main products are phablet phones, which are mainly sold to Southeast Asia, India and other places, ranking among the top 20 in China, and has the production capacity of intelligent devices such as medical device boxes and VR glasses. In early 2017, the company entered the domestic mobile phone market through cooperation with Philips. With the help of Chutian's financial advantage, Miki Intelligence can not only continue to grow in traditional strong areas such as mobile phone tablets, but also is expected to further deepen electronic related fields through continuous mergers and acquisitions.
The innovation of incentive mechanism and the vanguard of state-owned enterprise reform. Miki Intelligent merge Table introduces management shareholding, which currently holds a total of 8.494 million shares, which is the only company in the high-speed sector to achieve management shareholding; on the one hand, the improvement of the incentive mechanism helps to enhance the enthusiasm of management, improve the company's operating efficiency and performance; on the other hand, it also helps to enhance management's attention to investors and further reduce information asymmetry.
Raise earnings forecasts and maintain "buy" ratings. In February, the company withdrew from the industrial fund and earned 4251 million non-operating income. Together with the Miki consolidated statement, the company increased its pre-tax profit by at least 150 million. We raise our profit forecast to estimate that the net profit from 2017 to 2019 is 545 million, 581 million and 612 million respectively (the original 17-year forecast is 430 million yuan and 512 million yuan), and the diluted EPS is 0.32 yuan, 0.34 yuan and 0.35 yuan respectively, corresponding to the current share price PE of 19 times, 17 times and 17 times respectively. We believe that the current market underestimates the technical level and market space of Miki Intelligence, and the valuation has not yet reflected the reasonable value of Miki Intelligence and the expectation of sustained in-depth development of the industrial chain in the future, maintaining the "buy" rating.
Risk hint: Miki intelligent performance is not up to expectations; policy impact on highway traffic may decline.