Net profit in 2016 rose 5.3% from a year earlier, lower than expected
Haiyin Co., Ltd. announced its 2016 results: operating income was 1.994 billion yuan, up 20.7% from the same period last year; net profit attributed to the parent company was 206 million yuan, up 5.3% from the same period last year (15.5% after deducting non-profit), corresponding to a profit of 0.09 yuan per share, which was lower than we expected. Year-on-year Q4/Q3/Q2/Q1 revenue is + 28.8%, 17.0%, 16.2%, 19.7%, respectively, and net profit is + 4.7%, 4.7%, 38.4%, 25.4%, respectively.
1. In terms of revenue, business, finance, entertainment and other businesses have grown steadily, with sufficient driving force for subsequent growth. The commercial sector benefited from the bottoming out of business such as property leasing and department stores, as well as the settlement of real estate projects in another city of Panyu, with revenue of 1.76 billion yuan for the whole year, an increase of 9.5% over the same period last year. The rapid growth of financial subsidiaries such as Shanglian payments and Haiyin small loans in the financial sector led to a 103.1% year-on-year increase in financial business revenue. Red Sun in the entertainment sector is in the iterative period of programs and actors, and revenue is basically the same as the same period last year.
Considering the large number of high-quality reserve projects in the company's business (located in Shanghai, Zhuhai, Zhaoqing and other places), and the great potential for the development of entertainment and financial business, its revenue is expected to maintain rapid growth in the future.
2. The decline in profitability and non-recurring gains and losses are a drag on the company's performance. The company's overall gross profit margin declined 0.6ppt compared with the same period last year, while business, finance and entertainment business all declined to varying degrees, which is expected to be related to the larger investment in the training period of new projects; during this period, the expense rate decreased 0.4ppt, the sales / management / financial expense rate increased year-on-year + 2.3/-0.5/-2.2ppt respectively, and the rapid increase in sales expense rate was mainly due to the increase in sales commission set aside in the real estate sector and the Red Sun table. In addition, the increase in asset impairment loss and the decrease in non-operating income also have a certain drag on the performance, which together affect pre-tax profit of about 37 million yuan.
Trend of development
The main results are as follows: 1. The Haiyin biosphere rises abruptly based on its accumulated strength, and its medium-and long-term sustainable development is sustainable.
① business: on the one hand, carry out diversified layout, enter into intelligent warehousing, creative industry parks and other projects to help create a "Dahaiyin" business platform; on the other hand, actively reserve high-quality commercial property projects to create new growth points
② entertainment: wholly-owned Red Sun to build a national performing arts platform, with the upgrading of programs and actors, the future is expected to usher in a new round of growth
③ Finance: with Haiyin Financial Control as the platform, it has launched small and micro finance, financial leasing, factoring, payment and other services, and initiated the establishment of Huacheng Bank, Huacheng Life Insurance and other fields.
2. Convertible bonds were successfully issued with a conversion stock price of 5.26 yuan per share. In order to optimize the structure of assets and liabilities, the company may have a strong driving force to promote convertible bonds into equity in the future.
Profit forecast
In view of the great profit pressure in the new business incubation stage of the company, we lowered our earnings per share forecast for 2017 to 0.11 yuan, a reduction of 15%, and introduced EPS0.14 yuan in 2018.
Valuation and suggestion
At present, the company's share price is equivalent to 40 times the price of the company in 2017, the company's stock price is equivalent to 40 times the price of E in 2017. Maintain the recommendation, in view of the downward adjustment in the earnings forecast, we lower the target price by 15% to 5.7 yuan, which is 27% higher than the current share price.
Risk.
The progress of commercial projects is lower than expected, real estate settlement fluctuates, and the risk of cross-border M & An integration.