In 2016, the company realized operating income of 27.155 billion yuan, an increase of 21.03% over the same period last year, a net profit of 1.223 billion yuan, an increase of 6.08% over the same period last year, deducting a non-return net profit loss of 220 million yuan, and an income of 0.32 yuan per share. The distribution scheme is 0.48 yuan (including tax) in cash dividend for every 10 shares.

In 2017, the operating income, net profit and non-return net profit of Q1 company were 5.925 billion yuan, 278 million yuan and 95.32 million yuan respectively, an increase of 6.5%, 38.78% and-50.18% respectively over the same period last year.

On the revenue side: 1. Trade business grew by 51.98% over the same period last year, becoming the main driving force behind revenue growth in 2016. The company achieved revenue of 27.155 billion yuan in 2016, an increase of 21.03% over the same period last year, of which the revenue of the military business was 5.83 billion yuan, an increase of 1.39% over the same period last year, with a gross profit margin of 14.96%, an increase of 0.59 pct over the same period last year. The revenue of the civilian business was 101.65 yuan, an increase of 10.33% over the same period last year, with a gross profit margin of 7.91%, a decrease of 0.87pct over the same period last year. The revenue of the trade business reached 12.016 billion yuan, an increase of 51.98 percent over the same period last year, with a gross profit margin of 1.44 percent, a decrease of 1.77pct compared with the same period last year. 2. The profitability and order growth rate of the military business bottomed out in 2016, and it is expected to achieve double growth in profitability and order size in 2017. After 2015, the military supplies bidding method changed to the low-price bidding method, which led to disorderly competition in the market and the decline of the company's military business gross profit margin.

It is expected that with the change of the bidding method to the comprehensive bidding method in 2016, the company will be able to benefit from the competition by virtue of its strong R & D strength and comprehensive supply guarantee capability. after 2017, the gross profit margin of military orders will gradually recover and the size of military orders will increase. 3. The business of "JH1912" independent brand "O2O" (online and offline collaboration) is progressing smoothly. By the end of 2016, "JH1912" had opened a total of 51 stores, the "Tmall" flagship store had been officially opened, and other online sales platforms were being built one after another.

From the profit side, the company is in a period of transition, land disposal income and government subsidies form a useful supplement to the net profit. 1. The main reasons for the company's deduction of non-net profit loss of 220 million yuan are: 1) the growth rate of trade business income with low gross profit margin is fast, which lowers the overall gross profit margin level 1.54pct to 7.13%. 2). During the transition period, Jihua Garden, JH1912 brand channel construction and international technical cooperation are still in the period of investment, construction and market cultivation, and have not yet formed scale income. Rigid costs such as labor, rent, depreciation and amortization are relatively large, with a decrease of 1.52pct to 6.22% (3) compared with the same period last year, and provision for bad debts of 251 million yuan, an increase of 52 million yuan over the same period in 2015. The above factors led to a loss of 142 million yuan in operating profit. 2. Since most of the company's enterprises are located in the core area of the city, combined with the local government's plan to leave the city and enter the park and the requirements of the development of land assets in the old factory area or the implementation of government collection and storage, the company has moved its production business one after another since 2013. the profit and loss of disposal of non-current assets reached 1.069 billion yuan in 2016. In addition, the company carried out forward-looking R & D and innovation in projects such as environmental protection filter materials, raw material drug development, high-end textile technology and protective equipment, actively applied for government subsidy funds and national special fund support, and obtained government subsidy funds of 713 million yuan. As a result, the net profit of returning home reached 1.223 billion yuan, an increase of 6.08 per cent over the same period last year.

Dingzeng helps the company transform the modern service industry and create a unique model of "1x" in Jihua Garden. The company's fixed increase projects include 4.1 billion yuan of investment in International Huayuan (Chongqing, Changchun, Yangzhong, Xi'an, Xianning, Qingyuan), which is mainly composed of shopping centers, indoor sports centers, hotels and special catering services. at present, the fund-raising work has been completed. Different from the traditional shopping center, Jihua Garden has a unique location, depends on the metropolis, but is far away from the metropolis, and the investment cost has an advantage. In addition, indoor surfing, indoor skiing, indoor rock climbing, indoor skydiving and other sports are introduced to improve customer stickiness and shopping experience. Among them, the indoor extreme sports venues of the Chongqing project were put into trial operation in October 2016, fashion shopping and catering and entertainment will be put into trial operation in the first half of 2017, and other projects are expected to be completed in the second half of 2018.

Profit forecast and investment suggestions: due to the large initial investment and long payback period, the contribution of Jihua Garden to the company's performance will not be considered for the time being. It is conservatively estimated that the EPS of the company from 2017 to 2019 is 0.36,0.44,0.47 yuan respectively, and the corresponding price-to-earnings ratio is 23.25,19.02,17.81 times. Excluding the 66.33 per cent stake held by emerging International China Group and the 3.55 per cent stake held by Central Huijin, the actual market capitalization in circulation is less than 10 billion yuan, maintaining a "buy" rating.