Main points of investment:
The company issued the outline of the development plan for 2017-2020: improve the traditional business plate and create new industries.
On April 18, 2017, the company announced that it would build an industrial holding group with obvious core competitive advantages. On the one hand, continuously improve the industrial chain of the existing business plate; on the other hand, the layout of the new industrial plate. In particular, around intelligent manufacturing, big health and other emerging industries to actively explore and cultivate, focus on advantages to seek breakthroughs in emerging industries.
Changzhou real estate market development is stable, urban construction plate PPP has become the focus of expansion. Historically, the commercial housing market in Changzhou is relatively stable, but at present, the sales price growth rate of commercial housing in Changzhou is still fluctuating upward. By the end of 2016, the company's reserve projects were concentrated in Changzhou, with a total of 220.0 million square meters of equity construction, including 1.796 million square meters of unsettled equity construction. In June 2016, the company set up Black Peony (Hong Kong) Development Company at 1 million yuan and Peony Xinlong Company, a wholly-owned subsidiary company, at 650 million yuan. In September 2016, the company plans to increase the capital of Black Peony Development (Hong Kong) Co., Ltd. by 230 million yuan. In October 2016, the company signed the second phase of key infrastructure PPP project in Xinbei District of Changzhou City from 2015 to 2016. In November 2016, the company's subsidiary Black Peony Construction signed a 1.7 billion yuan PPP project franchise agreement.
Since 2016, the company's textile sector has launched the internationalization strategy. In 2016, the company's textile sector vigorously promoted technological reform and the deep integration of the two technologies on the one hand, and accelerated the implementation of the globalization strategy on the other. In 2016, with the help of the "Belt and Road Initiative" national strategy, the company conducted relevant inspection and negotiations with some African and Southeast Asian countries to develop strategic partners in Cambodia and Vietnam.
The company's equity investment has blossomed more since 2016. In 2016, Jixing Technology, which the company participated in, entered the first vehicle power battery catalogue of the Ministry of Industry and Information Technology; the company invested in Lamborg Seal Technology through its subsidiary of Zhonghe Investment; the US kateeva project invested through Yixing Fund was prepared for listing; Shanghai Getty Electric Power Technology Co., Ltd., invested through Yixing Fund, was acquired by a listed company Creative Information; Changshu Auto Decoration was listed on the Shanghai Stock Exchange on January 5, 2017. In July 2016, the company invested 240 million yuan to jointly establish Changzhou Local legal person Life Insurance Company.
Investment suggestions: set textile and clothing, urban comprehensive development, industrial investment as one, to maintain the "holding" rating.
On behalf of the government, the company is carrying out full-service deep ploughing and development of the New North District; the 17.5sq km high-speed rail area and Wanqiang fertile land project during the first phase of construction are progressing smoothly, and the second phase of land development is under way. According to the contract, the company will receive 10% of the project income and 5:5 share of the income. The New North District, which has a low price-to-income ratio of 439 square kilometers in Changzhou, has only developed 1Comp5, which has room for expansion in the future. The company promotes textile and clothing to rejuvenate through brand strategy (self-created jeans ERQ brand), and the company's industrial investment is steadily expanding. Therefore, we estimate that the company's EPS in 2017 and 2018 is 0.44 yuan and 0.59 yuan respectively, and the corresponding RNAV is 11.13 yuan. Taking into account the company's fund-raising to enhance the staying power of development, we take the company's RNAV, that is, 11.13 yuan as the company's target price for the next 6 months, to maintain the "overweight" rating. Risk hint: the industry faces two major risks: interest rate hike and policy regulation.