Events:

The company released its annual report on the evening of March 31, with revenue of 282 million yuan in 2016, an increase of 2.03% over the same period last year, a net profit of 140 million yuan, an increase of 9.21% over the same period last year, and a non-return net profit of 140 million yuan, an increase of 8.55% over the same period last year, achieving EPS0.3 yuan.

The company plans to hand out 0.5 yuan for every 10 shares.

Main points of investment:

The hydropower business is operating steadily.

The company achieved operating income of 52 million yuan in the fourth quarter, down 18% from the same period last year, mainly because the grid electricity price of the company's power station was reduced by 3 cents per kilowatt-hour. For the whole year, Zhuzhou aviation power generation increased by 26 million kilowatt-hours, while that of other power stations increased steadily. The impact of electricity price reduction was fully offset by water inflow, and the income of hydropower business in 16 years was basically the same as that in 15 years. Due to the reduction in electricity prices, the revenue from hydropower business is expected to be reduced by more than 20 million yuan in 2017.

The rehabilitation business is beginning to take shape.

Over the past 16 years, Pok'ai Medical achieved a net profit of 22.17 million yuan and fulfilled its performance promise. The revenue of its Xiangya Boai Rehabilitation Hospital increased by 21% over the same period last year, and the number of patients for diagnosis and treatment increased by 8%. The three newly established Hunan Changde Boai Rehabilitation Hospital, Xiangxi Autonomous Prefecture Boai Rehabilitation Hospital and Hengyang Boai Children's Rehabilitation Hospital have successively started business in 16 years, with an overall income of less than 6 million yuan. Wuhan Qiaoya Rehabilitation Hospital is also under preparation. At present, the company has more than 900 beds and more than 300 beds under construction. It is expected that with the drainage from large hospitals, the rehabilitation business will become a new profit growth point.

Institutional pension and community pension are progressing smoothly.

In terms of community pension, the company has opened two community home care service centers in Changsha and signed cooperation agreements with a number of communities. In terms of institutional pension, the company has worked out the first phase of Chunhua Health Industrial Park, and obtained construction land, and the business model of providing for the aged has been continuously improved in the process of expansion.

Give a "recommended" rating.

In view of the sound operation of the company's hydropower business, the gradual expansion of the rehabilitation business and the smooth progress of the pension business, it is estimated that the EPS from 2017 to 2019 will be 0.29,0.32,0.40 yuan respectively, corresponding to the closing price of 15.68yuan on March 31, with a price-to-earnings ratio of 54,49 and 39 times respectively.

Risk hint

The water supply is insufficient, the electricity price is reduced, and the business development of rehabilitation and pension is not as expected.