Main points of investment

1. The advantages of pharmaceuticals and pharmaceutical circulation are maintained, the trade losses are increased, and the energy sector effectively reduces losses. Liaoning Chengda is a diversified holding enterprise integrating trade, biopharmaceutical, energy development and financial investment. In 2016, the company continued to maintain a good momentum of development in the traditional advantage sector. In the biopharmaceutical sector, the company accurately responded to "vaccine safety incidents" and turned the crisis into opportunities. Through cooperation with large logistics and distribution enterprises, and set up a new distribution channel directly to the county CDC, achieving an after-tax profit of 540 million yuan and human rabies vaccine sales of more than 6.41 million people, continuing to consolidate the advantages of the industry. At the same time, it also contributes to the soundness of the company's performance. In terms of commodity circulation, Chengda Fangyuan continues to maintain its status as one of the top 10 chain drugstores in China. at present, 1113 stores cover 5 provinces and 19 cities in Northeast, North and East China, and sales revenue has increased by 11.52% compared with the same period last year. In terms of domestic and foreign trade, the sales of thermal coal and oil products continue to be the core. Due to the recovery of the coal market in the second half of the year, the thermal coal business is steadily rising, with sales revenue of 895 million yuan, an increase of 26% over the same period last year, and oil business sales revenue of 1.615 billion yuan, down 4.4% from last year, but the overall loss reduction effect of the trade sector is not obvious. The pre-tax profit is-199 million yuan, which is larger than the loss area of 2015-148 million yuan. In the energy development sector, due to the slow recovery of oil prices, the company continued to maintain a cautious attitude. Chengda Hongsheng turned to a long-term suspension of production in February 2016, with a pre-tax profit of-180 million yuan, a year-on-year loss reduction of 51.44%. The financial sector continues to contribute investment income

The company's layout of the financial sector is mainly carried out through equity investment. GF Securities Co., LTD., who participated in 16.4% of the company's shares, although the investment income belonging to listed companies was 1.319 billion yuan last year, down 39.12% from the same period last year, he was bullish on the industry average as a whole. the reason is that GF Securities Co., LTD. achieved corner overtaking by actively seizing market opportunities in 2016, and his business income and net profit entered the top three in the industry, further consolidating his position. Especially in the investment banking business sector, operating income reached 2.738 billion yuan in 2016, an increase of 33% over the same period last year, and 16 IPO main underwriting projects were completed, ranking second in the industry. In the context of the acceleration of IPO this year, Guangfa currently ranks first in the number of reviewers and has sufficient project reserves, which is expected to continue to contribute to its performance release this year. In December 2015, the company won 3 billion shares of China United Insurance Holdings Co., Ltd for 8.2 billion yuan, with a shareholding ratio of 19.6%. China Insurance contributed 231 million yuan to the company's investment income in 2016, and Chengda Coastal Fund brought an investment income of 80 million yuan. Further balance the company's income structure.

3. Investment suggestion

The overall performance of the company is lower than expected, and the main reason for our analysis is that the impairment loss base of Jilin oil shale is relatively low last year; the performance of China United Insurance has declined significantly in the past 16 years, with a decrease of 47.07% compared with the same period last year, which makes Chengda's investment income lower; the loss area of the trade plate continues to expand. Although energy development has achieved results in reducing losses, and the performance of GF Securities Co., LTD., Chengda Bio and Chengda Fangyuan is relatively sound, it cannot cover the drag on the company's performance from other sectors. In 2017, we are optimistic that oil prices will pick up at the bottom, and the company's current valuation is low, with an estimated 17/EPS of 0.74, corresponding to 23.5 times PE, maintaining the recommended rating.