Event: (1) the company released its performance KuaiBao. The company's operating income reached 1.0037765 billion yuan in 2016, down 15.97% from the same period last year. The total profit is-427.1249 million yuan, the net profit is-288.5488 million yuan, and the earnings per share is-0.28 yuan. Prior to the disclosure of the company's 2016 performance forecast of 215 million yuan-195 million yuan, the performance KuaiBao special performance forecast has some differences. (2) the company issued a forecast for the first quarter of 2017, with an estimated loss of 7000-60 million yuan, compared with a loss of 57.6812 million yuan in the same period last year. (3) the subsidiary Zhangjiajie Huatiancheng Home has received a total of 3.71 million yuan in industrial support funds, which is included in the non-operating income in 2017.
The main reason for the decline in performance is the reduction in capitalized interest and the provision for impairment. The construction of part of the construction of the company's subsidiary Huitang Real Estate and Zhangjiajie Hotel has been suspended, and the company has included the borrowing costs during the shutdown period into the current profit and loss according to the recommendation of the annual audit accountant, resulting in a reduction of 72.94 million yuan in net profit. In addition, according to the principle of prudence, a separate impairment test was conducted on the 159 million receivables of Beijing Dreyt Company and Cao Dejun, and the provision for bad debts was made up of 36.2 million yuan, resulting in a reduction of 25.4177 million yuan in net profit.
The main business of the company has not deteriorated, and planning in advance can reduce the performance pressure in the following years.
The reduction of this performance has nothing to do with the main business operation of the company, but only according to the accounting policy and the principle of prudence. The company's main business has suffered continuous losses in recent years, and the advance calculation of borrowing costs can reduce the pressure of depreciation charges after project consolidation and have a positive impact on the performance of subsequent years.
The change of the chairman shows the reform determination of Hunan SASAC. The main business of the company has been losing money continuously for many years, and the pressure of reversing losses is huge. At the beginning of this year, Hunan Provincial SASAC put forward the goal of making profits for all provincial regulatory enterprises this year. Chen Jiming, the former chairman of the board, served as chairman of the company for 18 years. At the beginning of March this year, Jiang Li, former general manager of Yueyang Forest Paper, was parachuted to Huatian Group as chairman of the company, and was elected as chairman of the company on April 6. The rapid action shows the determination of Hunan SASAC to seek reform and development and promote enterprise transformation.
The value of the company's own property and real estate is much higher than the market value. The company is the leader of the hotel industry in Hunan Province, with rich accumulation of self-owned properties, with a total area of more than 1 million square meters. The company's real estate business in Hunan Province, in Ningxiang Huitang, Shaoyang, Loudi, Youxian and other third-and fourth-tier cities have stored a lot of land. In recent years, the real estate market has continued to be hot, and the value of land and real estate has increased significantly, with a conservative estimate of more than 10 billion, enough to support the current market capitalization of 6.5 billion of the company.
With the promotion of the company's hotel light assets operation and real estate cooperative development, the value of the assets will be revalued and realized. The company has been trying to operate light assets in recent years, and there have been many pilot projects in the early stage. the appointment of the new chairman is expected to promote the company's business transformation, accelerate the realization of assets, and improve performance through asset revaluation. The light assets of the company's hotel business take the form of self-owned property sales and leaseback or trusteeship to reduce the depreciation pressure of the hotel's fixed assets, make the hotel light, turn losses into profits, and at the same time get a lot of funds for new projects.
The real estate business takes the form of cooperative development, contracts residential and commercial land to developers, collects land contract fees and housing sales commission, reduces the financial pressure on the company's real estate project development, and at the same time can obtain the income of land value-added.
Investment suggestion: the total value of the company's assets is conservatively estimated at about 10 billion, and the possibility of other capital operations of the company is not considered for the time being. assuming that the company operates assets at a rate of 10% per year from 2017 to 2018, based on the average gross profit margin of asset operations from 2013 to 2015, it is predicted that the EPS for 2016-2018 will be-0.28 yuan.
Rating, corresponding to 30 times PE in 2018, with a target price of 10.2 yuan.