Main points of investment:

The sales and operating performance increased steadily during the annual report period. In 2016, the company achieved an operating income of 353 million yuan, an increase of 7.84% over the same period last year, a total profit of 43.53 million yuan, an increase of 5.24% over the same period last year, and a net profit of 35.37 million yuan belonging to shareholders of listed companies, an increase of 14.84% over the same period last year. The company mainly engages in offline multi-channel chain retail, multi-brand and multi-category professional outdoor sports equipment, and organizes outdoor activities and outdoor competitions at the same time. In July 2016, the company added comprehensive outdoor camp design, construction and operation and youth outdoor experience education business. Sales and operating performance grew steadily in 2016, with annual revenue growth of 7.84%, of which outdoor products sales revenue was 340 million yuan, an increase of 6.0% over the same period last year. Outdoor service revenue from emerging businesses is now small but growing rapidly, with annual revenue of 13.61 million, an increase of 90.19% over the same period last year. It is expected to maintain rapid growth in the future and become another important pillar of revenue.

Create a trinity business model of offline product sales + event organization + camp and youth outdoor experience education to consolidate professional experience, high-quality member resources, own brand research and development and other advantages. The company combines offline chain stores and online e-commerce channels to build a sales platform for multi-brand and multi-category outdoor products to meet the needs of one-stop purchase. At the same time, develop outdoor sports clubs, organize various types of outdoor activities, training, outdoor events; design and build comprehensive outdoor camps to build a high-quality youth outdoor experience education and training system. The three main businesses connect and support each other, forming a relatively complete comprehensive ecological chain of outdoor sports industry, and the business model has collaborative competitive advantages and extensive development space. The company has obvious competitive advantages in the same industry, the company has professional outdoor activities and event organization experience, has a number of Chinese prefix and international orienteering events exclusive operation of IP resources and independent IP resources; the company has more than 300000 members, the scale is still growing rapidly, high-quality member resources have led to the growth of sales and profits of the company. In recent years, efforts have been made to develop their own brands, and two major private brands, Animaqing and Sanfu children's wear, have launched a wide range of products.

Regional expansion strategy and camp training emerging business support the company's future growth prospects by leaps and bounds. In July 2016, the company established Beijing Sanfu Outdoor Sports skills training Company, set up international professional camp design and construction operation team and youth outdoor experience training team, actively developed camp business in many first-and second-tier cities, and carried out in-depth cooperation with professional institutions at home and abroad. In December, the GRIT weekend camp, an outdoor youth camp, opened and harvested well. In the future, integrated outdoor camp design and operation construction and youth outdoor experience education system construction will become one of the company's important development strategies. In terms of regional expansion, in 2016, the company successively reached strategic cooperation with the governments of Alshan, Daqing, Suqian and Nanjing Laoshan to make use of the market operation capacity formed by Sanfu for many years, combined with the advantage of rich local resources, to promote the development of the local outdoor sports industry and form large-scale operations.

Improve the equity incentive mechanism and increase shares to show the sincerity and confidence of the management. The company plans to distribute a cash dividend of 0.60 yuan (including tax) to all shareholders for every 10 shares, and use the capital accumulation fund to increase 5 shares for every 10 shares of all shareholders, demonstrating the company's solid confidence in its own development and future prospects. At the same time, the company completed its first employee restricted stock incentive program in 2016.

Profit forecast. The company's main business sales growth rate is steady, the brand and channel competitive advantage is solid, high-quality member resources and event organization resources have not yet fully released the coordinated contribution to revenue. In addition, the prospect of the company's emerging business is optimistic, especially the youth camp training business has professional accumulation and first-mover advantages, and it is expected to quickly establish a dominant market share in the blue ocean market after realizing large-scale operation in the future. create an important new driving force for the company's revenue growth in 18-19. We estimate that the EPS of the company from 2017 to 2019 is 0.62,0.95 and 1.46 yuan respectively. Considering that the company is a scarce target in the outdoor sports industry, as well as the high growth of the outdoor sports and training experience market, we value the company 130 times in 2017, corresponding to the target price of 80.6 yuan. Give the company an overweight rating.

Risk hint. The macroeconomic downturn affects the risk of sales revenue; the development of new business is less than expected.