Pegasus International publishes its 2016 annual report. In 2016, the company achieved operating income of 52.16 billion yuan (+ 9.15%), gross profit margin rose to 0.82% (+ 0.19pct), net profit attributed to the parent company was 1.53 billion yuan (+ 574.79%), EPS was 1.58 yuan. The company plans to pay a cash dividend of 1.10 yuan (including tax) for every 10 shares and increase 7 shares for every 10 shares in the capital accumulation fund.
Vigorously expand the supply chain business of the resources industry. The company's operating income reached 52.16 billion yuan in 2016, an increase of 9.15% over the same period last year. The increase in revenue was mainly due to the expansion of the company's supply chain business in the resources industry. It has been revealed that in the future, the company will actively expand new business areas such as the building materials industry by ploughing the existing supply chain, and provide deep value-added services to customers by extending the service chain.
Get involved in environmental protection and new energy, and promote the development strategy of double main industries. During the reporting period, through equity acquisition, the company obtained an operational waste incineration power generation project and a pilot biomass and waste mixed-burning power generation project, and cooperated with a number of local governments to invest, build and operate vein industrial parks and circular economy industrial parks through market expansion. In 2016, the company realized 152 million yuan of related income (0.29% of the total revenue) and 69 million yuan of gross profit (16.65% of the total gross profit) in the environmental protection and new energy industry.
Change of accounting policy for investment real estate. In order to reflect the true value of the investment real estate held by the company more objectively, the company decided to change the accounting policy of the follow-up measurement model of investment real estate from December 1, 2016, that is, from the cost measurement model to the fair value measurement model. The change in the fair value of the investment real estate held by the company increased the net profit by about 1.369 billion yuan in 2016, of which the net profit belonging to the shareholders of the listed company was about 1.314 billion yuan, representing the growth of non-recurrent profit and loss.
Investment advice: benefiting from the warming of the bulk supply chain, we expect the company to have an operating income of 56.86 billion and 62.26 billion yuan in 2017-18 and a net profit of 2.135 billion and 2.545 billion yuan. Select the average price-to-sales ratio of 0.3884 times over the past six months, with a six-month target price of 22.71 yuan and a "overweight-A" rating.
Risk tips: foreign exchange business earnings fluctuate, new business expansion is not as expected, etc.