Main points of investment

Event

According to the company's annual report in 2016, the total operating income was 811 million yuan, down 40.86% from the same period last year. The net profit belonging to shareholders of listed companies was 163 million yuan, up 114.02% from the same period last year. The deduction of non-net profit belonging to shareholders of listed companies was 69 million yuan, down 3.37% from the same period last year. In addition, the company intends to pay a cash dividend of 1.00 yuan (including tax) for every 10 shares on the basis of the total share capital of 242 million shares at the end of 2016, and to increase the share capital of 10 shares to all shareholders in the form of capital reserve.

Comment

Overall profits were slightly lower than expected: the company's operating income fell by 40.86%, mainly due to the sale of cement assets, and the net profit belonging to shareholders of listed companies increased significantly by 114.02%, mainly due to the divestiture of cement assets during the reporting period. the non-operating income was 89 million yuan.

Class financial business is lower than performance commitment: the performance commitment of class financial business for 2015-2017 is 190 million, 240 million and 310 million respectively, and the actual completed performance in 2016 is 210 million yuan, which is lower than the performance commitment of 30 million yuan, which will be compensated by Sony Investment according to the agreement. The reasons why the class financial business is lower than the performance commitment mainly include: (1) the overall downward market interest rate, which affects the rate of return on the company's assets; (2) the tightening and tightening of the financial regulatory environment, and the limited development of the operation scale of pawn and small loan companies.

2.4 billion acquires Haike Rongtong and marches into third-party payment: the company intends to acquire 100% equity of Haike Rongtong by issuing additional shares and paying cash, with a transaction consideration of 2.379 billion yuan, of which 1.813 billion yuan is paid for the issued shares and 566 million yuan in cash. At the same time, the matching funds raised by non-public offering shares are 1.5 billion yuan, and the additional offering price is 21.49 yuan. The performance commitments of Haike Rongtong from 2016 to 2019 are 100 million yuan, 195 million yuan, 270 million yuan and 335 million yuan respectively. At present, the scheme has been accepted by the Securities and Futures Commission.

Profit forecast: without considering the acquisition of Haike Rongtong for the time being, we adjust the profit forecast of the company's net profit from 2017 to 2018 to 142 million and 177 million, corresponding to an EPS of 0.59 yuan and 0.73 yuan respectively.

Risk hint: the risk of failure in asset restructuring, and the development of similar financial business is less than expected risk.