Main points of investment:
Both revenue and net profit increased, and the relative advantage of the asset structure was obvious: the company released the first quarter report of 2017, with operating income of 553.1516 million yuan during the reporting period, an increase of 8.44% over the same period last year, and a net profit of 23.1141 million yuan belonging to shareholders of listed companies, an increase of 19.39% over the same period last year. The company's revenue and profits developed steadily. By the end of the reporting period, the company's current assets totaled 1.13 billion yuan, including 563 million yuan in monetary funds and 405 million yuan in other current assets, with relatively abundant disposable funds; the company's total net assets were 1.27 billion yuan, the total asset-liability ratio was 26%, and the asset structure was healthy. Under the background of increasing income, the relative advantage of the company's extension layout is obvious.
It is expected to use the spring breeze of regional upgrading, innovation and development, invigorate assets and optimize the system. The reform of state-owned enterprises in Guangdong Province is relatively strong, 2017 is also the year to tackle key problems, and institutional optimization measures throughout the province are expected to continue to emerge. At the same time, in the first quarter, Guangdong-Hong Kong-Macau Greater Bay Area officially put forward the concept that Zhuhai, Guangzhou, Shenzhen and the surrounding areas are expected to face regional upgrading opportunities, bringing comprehensive value enhancement. The controlling shareholder of the company has completed the mixed reform at the level of the controlling shareholder. As a private enterprise, the second largest shareholder of the parent company has strong capital strength and rich operating experience in real estate and other fields. The company is expected to optimize management and incentive mechanism on the basis of continuous running-in. As the main teaching assistant distributor of K12 stage teaching materials of the provincial education bureau, the education publishing business has stable customer resources upstream and downstream; the company has the largest cold storage + frozen goods market in the province, and occupies the leading position in the meat and food cold chain. In the new year, the company is expected to continue to benefit from regional upgrading opportunities, strive for progress in stability, improve the utilization rate of the company's land, funds and business, and gradually achieve value enhancement through capital operation and innovative development.
Investment advice and profit forecast. We believe that Guanghong (1) combined with the advantages of background resources, recent system optimization actions, regional national reform goals, the company's strategic upgrading demand is obvious. On the one hand, in the education industry, Guanghong has a leading channel advantage in Guangdong Province, strong cooperation in grafting educational resources and expanding product lines, relatively solid financial foundation, steady growth in income and profitability, abundant cash reserves, low debt ratio and other characteristics, financial strength to build a strong backing for transformation and upgrading. On the other hand, the company is not deeply involved in other areas of education industry other than teaching materials and teaching, and still needs to cooperate to shorten the learning curve. (2) valuation has a certain margin of safety: the company's original industrial land is in the process of urbanization in Guangzhou, Zhongshan, Panyu, etc. the possibility and necessity of changing land use and significantly increasing value is also in line with the inherent needs of the company's strategic upgrading and optimizing asset structure. The company's original double main business has a unique regional monopoly advantage, facing the background opportunity of consumption upgrading and steady growth of income and profit.
Based on the development trend of the existing business, regardless of the possible future capital operation, we predict that the net profit of the company in 2017 and 2018 is 127 million and 141 million respectively, and the corresponding EPS is 0.22 yuan and 0.24 yuan respectively.
Combined with the valuation level of the listed companies in the same industry, the profit contribution of the two main industries of the company, and the background trend of the company's strategic upgrading, we will initially give 60 times PE in 2017, corresponding to the target price of 13.2yuan per share, and maintain the buy rating.
Risk tips: the reform process and extension development of state-owned enterprises in Guangdong Province are not as expected; the risks of cold chain industry, publishing industry and so on.
