The performance of the annual report is eye-catching: according to the company's annual report, the company's operating income in 2016 was 4.535 billion yuan, down 1.71% from the same period last year; the net profit of returning to the mother was 548 million yuan, up 18.76% from the same period last year; and deducting the net profit of 528 million yuan from the same period last year, up 100.58% from the same period last year.
The annual report is eye-catching.
Venture capital sector performance significantly improved: the company deducted non-home net profit growth is far greater than the home net profit growth. From February to May 2015, the company reduced its stake in Volkswagen A shares by 14.8219 million shares (accounting for 0.94% of Volkswagen's share capital) in the primary market, and achieved an equity transfer income of 214 million yuan. As a result, the non-recurrent profit and loss in 2015 was relatively high, with a non-return net profit of 263 million yuan. In 2016, the substantial increase in the company's performance is mainly due to the growth of the company's main profits and the larger increase in the profits of the participating companies, among which the performance improvement of the venture capital sector has made a greater contribution. The company's joint venture Shenzhen Venture Capital (13.93%) achieved a net profit of 1.34 billion yuan, an increase of 33% over the same period last year. In the first quarter of 2016, the company's Chinese culture investment (12.82%) contributed 99.5 million yuan in dividend income. In addition, the performance improvement of Volkswagen Transportation, Shanghai Volkswagen Gas, Jiading sewage treatment Project, financial leasing and small loan companies and Suchuang Gas consolidation also have a positive impact on the company's performance.
Abundant funds and strong extension expectations: the company has abundant funds. As of the annual report of 2016, the company has 3.42 billion yuan in the currency on hand; in the third quarter of 2016, the company has been formally approved by the Association of Inter-Bank Dealers on the quota of 4.1 billion yuan for medium-term bills, short-term financing bills and ultra-short-term financing bonds. According to the announcement on March 11, the company plans to invest 1 billion yuan to become the new limited partner of Huacan Fund, accounting for 60.24% of its initial offering. Huacan Fund will participate in the mixed ownership reform of state-owned enterprises and market-oriented industrial M & An investment in the future. In an interview with Shanghai Securities News on March 10, Chairman Yang Guoping made it clear that in the future the company will make use of the "Amush" listing platform to carry out epitaxial mergers and acquisitions of overseas public utility assets around the "Belt and Road Initiative" strategy, and increase the proportion of public utility business from 50% to 60%, which is expected to significantly increase the company's performance.
Investment suggestions: we believe that the company will have a lot of prospects in the future, and the mixed ownership reform of state-owned enterprises in Shanghai will bring significant investment opportunities to the company; under the "Belt and Road Initiative" strategy, mergers and acquisitions of overseas high-quality public utility assets will significantly increase the company's performance; IPO will speed up and accelerate the performance of venture capital business. We estimate that the company's EPS for 2017-2019 will be 0.23,0.31,0.39 yuan, corresponding to PE 27.9X, 20.3X, 16.4X, with a "buy-A" rating and a 6-month target price of 8.50 yuan.
Risk hint: the progress of M & An is lower than expected.