Main points of investment:
In 2016, the company achieved operating income of 27.2 billion yuan, an increase of 21.03% over the same period last year, and a net profit of 1.22 billion yuan, an increase of 6.08% compared with the same period last year. 0.32 yuan per share of EPS0.48 yuan was distributed out of cash for every 10 shares, with a dividend rate of 15% and a dividend yield of 0.57%. The overall gross profit margin was 7.13%, down 1.54% from the same period last year, the sales expense rate was 1.82%, 0.51% lower than the same period last year, and the management expense rate was 3.76%, 0.95% lower than the same period last year. 4Q16 realized revenue of 8.59 billion yuan, an increase of 16.36% over the same period last year, a net profit of 453 million yuan, an increase of 362% over the same period last year, a gross profit of 6.35%, a decrease of 1.75% over the same period last year, and 1Q17 realized an income of 5.92 billion yuan, an increase of 6.50% over the same period last year, and a net profit of 278 million yuan, an increase of 38.78% and a gross profit of 8.03%, a decrease of 0.38% over the same period last year.
In 2016, the company's revenue by product was 5.83 billion yuan, up 1.39%, 14.96%, 0.59%, 10.2 billion yuan, 10.33%, 7.91%, 0.87%, 12 billion yuan, 51.98% and 1.44%, respectively. A decrease of 1.77 percentage points over the same period last year. Due to the pressure on the company's main business in recent years, asset disposal has brought the company a major non-operating income of 1.83 billion yuan.
The Jihua Garden project has been promoted in depth. The indoor extreme sports venues of the Chongqing project were put into trial operation in October 2016, and fashion shopping and catering and entertainment will be put into trial operation in the first half of 2017. At the same time, the Changchun project is already under construction and is expected to open for trial in 17 years. Other projects are expected to be completed in the second half of 2018. In March, the company signed a strategic cooperation relationship with Walltopia, a large Bulgarian sports equipment company, to explore the development of indoor and outdoor sports and entertainment equipment based on the original climbing wall business cooperation. The two sides will cooperate in the form of sports and entertainment in the future, and future operational projects include not limited to artificial rock climbing walls, artificial cave systems, children's recreational rock climbing, rope climbing, slide ropes, simulated rock walls, ninja systems, etc., and the International Huayuan project will make further breakthroughs in the business format in the future.
Profit forecast and valuation. The leading position of the company's military products is stable, and the business is relatively stable; the real estate reserves are rich, and the appreciation of land prices brought about by leaving the city and entering the park is realized; the investment of international Huayuan industrial projects is expected to produce new performance growth points. Taking into account the large initial investment and long payback period of the Jihuayuan project, we estimate that in 2018, the operating income is 295 / 32.5 billion yuan, and the net profit is 1.407 billion EPS0.34/0.37 yuan per share. Considering that the main business is still under pressure, we give it 27 times the dynamic PE in 2017, with a target price of 9.18 yuan and a "overweight" rating.
Risk hint: military supplies, civilian products business competition intensified, the promotion of the International Huayuan project did not meet expectations.
