The company issued a pre-profit announcement for 2016, and the net profit attributable to shareholders of listed companies was 134 million
The company issued a pre-profit announcement for 2016 on January 20. It is expected that the 2016 annual operating performance will turn a loss into a profit compared to the same period of the previous year, achieving net profit attributable to shareholders of listed companies of about 134 million yuan.
The performance fell short of expectations, mainly due to the calculation of 140 million inventory impairment provisions in the fourth quarter of 2016
The main reasons for the pre-earnings results in 2016 were: 1. The completion and delivery of the higher gross profit project (Qinglin Bay Phase 8) achieved an operating income of 1.77 billion yuan. The gross margin of the project was high, about 57%; 2. Some state-owned land in Tianyi Plaza, a wholly-owned subsidiary, was taken back and received compensation of 77.74 million yuan;
The main reason that the performance fell short of expectations was that after impairment tests, the company calculated and adjusted inventory price reductions of about 140 million yuan in the fourth quarter for the “Villa Project”, “Dongcheng Mingyuan Project”, and the “Jiangwan City Project”, which affected the net profit attributable to shareholders of listed companies in the current period of about -130 million yuan.
Benefiting from the inventory removal policy in the short term, I expect the effects of Ningbo's administrative division adjustment to show in the long term
Looking at the short term, Ningbo has not yet been affected by regulatory policies. Real estate sales prices have rebounded. In December 2016, the average commercial residential sales price exceeded 15,000, the sales area rose 96% month-on-month, up 79% year on year, and the commercial housing clearance cycle was shortened to 4.9 months, which helped the company speed up inventory removal; the retail self-operated business sector is expected to benefit from the recent clear rise in cement prices, increasing the company's revenue and gross profit levels; the cement sector has benefited from the recent obvious rise in cement prices, raising the company's revenue and gross profit levels;
In the long run, the company's stock of commercial projects is located in the core business district of Haishu District, which has significantly benefited from Ningbo's administrative division adjustments and the influx of registered population; as the only listed platform company controlled by Ningbo City Investment, the company is expected to play a more active role as a financing platform in the expansion and construction of Haishu District.
Adjust the 2016 profit forecast, adjust the six-month target price to 6.5 yuan, and maintain the increase in holdings rating
The adjusted company's 2016-2018 EPS was 0.09 yuan/0.22 yuan/0.29 yuan respectively, the corresponding P/E was 61/26/20, and the adjusted six-month target price was 6.50 yuan, maintaining the shareholding increase rating. The company raised its inventory impairment preparations for two consecutive years, which greatly affected net profit, and there is a possibility that the impairment may be prepared to reverse in the future. It is recommended to pay attention to the profit improvements brought about by subsequent increases in Ningbo real estate inventory removal sales.
Risk warning:
There is a possibility that Ningbo will later be included in the list of regulated cities; the company's real estate sales are poor.
