Brief comment on performance
The company issued an announcement of pre-increase in first-quarter results, and it is expected that the net profit attributed to shareholders of listed companies in the current period will increase by about 120% to 150% compared with the same period last year.
Business analysis
Financial support funds allocated by the Department of Finance increased significantly in the first quarter: the substantial increase in performance in the first quarter of this year was mainly due to the fact that the company received 278 million yuan in financial support from the Jiangxi Provincial Department of Finance on January 19, 2017, which was included in the profits and losses of the current period. It is estimated that the net profit in the first quarter of 2017 will reach 412 million yuan to 440 million yuan, while the company's net profit will be 187 million yuan in the same period of 2016. Due to the company's investment income of about 550 million yuan from the sale of shares in Guosheng Securities in the second quarter of 2016, without this income this year, the company's full-year performance is expected to decline, but the decline is expected to narrow.
The reconstruction and expansion project is carried out step by step to ensure the future high-speed business: from January to February 2017, the company realized toll income of 566 million yuan, an increase of 0.85% over the same period last year, which was significantly lower than that of 17.9% in the same period in 16 years, mainly due to the reconstruction and expansion of Changjiu Expressway. The overall bus traffic volume of the company decreased by 0.3% compared with the same period last year. We believe that although the reconstruction and expansion project has a temporary impact on the company's main business income, with the completion of the "four to eight" expansion project of the company's main road products and other trunk lines in the province in the future, the core road production flow will be greatly increased directly or indirectly to ensure the steady growth of the main business performance in the future.
The "highway +" strategy superimposes reasonable incentive conditions, and the company's performance has improved for a long time: the company's work focus has changed from asset management to capital operation, vigorously carrying out equity management and equity investment, starting with promoting "highway +". In recent years, the company has continuously optimized its business and asset structure, vigorously developed the highway extension industry, and accelerated the pace of financial equity investment. In addition, the company set up a performance incentive fund incentive plan at the end of 2016 to ensure a minimum annual growth rate of 7% of the company's net profit. In the case of the overall depressed highway market environment, the company's incentive conditions are reasonable, connecting the employees with the long-term steady development of the company's business, and effectively stimulate the enthusiasm of the management.
Profit adjustment
Due to the financial support funds allocated by the Jiangxi Provincial Finance Department, we raised the company's EPS to 0.40 yuan in 2017, an increase of 14%, corresponding to PE by 14 times; in 1819, EPS was 0.38,0.41 yuan, corresponding to PE was 15,13 times, maintaining the "buy" rating.
Investment suggestion
We believe that the traffic flow of the company's core road products will grow steadily in the future, and we are optimistic that the company will continue to cultivate energy, finance, tourism and other fields in the future, and the performance incentive plan will ensure the steady development of the company's long-term business.
Risk hint
The overall macroeconomic growth rate is in the doldrums, and the traffic volume is not up to expectations.
