Public Transportation released its 2016 annual report. In 2016, the company achieved operating income of 3,226 million yuan (+34.5%), gross margin fell to 34.4% (-0.94pct), net profit attributable to the parent company was 559 million yuan (+9.2%), and EPS was 0.24 yuan. The company plans to pay a cash dividend of 0.75 yuan (tax included) for every 10 shares.
Revenue from the real estate business has risen sharply. In 2016, the company achieved revenue of 3,060 million yuan, an increase of 37.8% over the previous year. The main reason was that the company's real estate business revenue rose sharply by 381.2% to 1.156 billion yuan during the reporting period. Affected by the increase in the pre-sale area of the company's real estate projects, the company's real estate sales planning fees increased, causing the company's sales expenses to rise 196.0% year-on-year compared to 2015.
The pressure on the company's main taxi business has abated. According to statistics from the Shanghai Municipal Transportation Commission, in December 2016, rail transit passenger traffic accounted for 52.5%, ground buses accounted for 34.8%, taxis accounted for 12.0%, and urban ferries accounted for 0.7% of the travel methods of Shanghai residents. The share of taxis continued to decline, down 2.2% from the beginning of the year. In the future, with the gradual improvement of rail transit in Shanghai and the impact of online car-hailing on taxis, we expect that the phenomenon of taxis under pressure will continue. However, benefiting from the company's implementation of a series of measures such as starting OBD in taxis and deepening the application of technology, the company's main taxi business is under pressure. In 2016, the company achieved revenue of 1,536 billion yuan in the transportation industry, down 3.6% from the previous year, and the decline narrowed from 2015.
Investment advice: We expect the company's 2017-2018 EPS to be 0.25 yuan and 0.26 yuan respectively, giving it an “increase in holdings - A” rating, with a target price of 6.8 yuan for six months.
Risk warning: real estate sales fall short of expectations, etc.
