Main points of investment:
Events. In the first three quarters, the company achieved operating income of 4.85 billion yuan, an increase of 56.8% over the same period last year; net profit belonging to shareholders of listed companies was 265 million yuan, an increase of 68.7% over the same period last year; and basic earnings per share was 0.25 yuan.
In the first three quarters of 2016, driven by a sharp increase in carryover, the company's revenue increased by 56.8% during the reporting period, and net profit growth expanded to 68.7% due to the level of expenses. At the end of the third quarter of 2016, the company's unstarted equity land area was 49.01 million square meters, and the equity capacity construction area was no more than 1.1351 million square meters. In the third quarter of 2016, the signed area of the company was 14.74 million square meters, an increase of 498.11 percent over the same period last year, and the signed amount was 1.1341266 billion yuan, an increase of 624.39 percent over the same period last year. As of September 30, 2016, the company's real estate rental area is 938,000 square meters, with a rental income of 4.3072 million yuan in the third quarter of 2016.
In July 2016, the company invested 240 million yuan to jointly establish Changzhou Local legal person Life Insurance Company. 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.
Investment advice. Increase the introduction of individual shareholders, raise funds to enhance the staying power of development, and maintain the "overweight" rating. The company integrates textiles and clothing, urban comprehensive development and industrial investment. 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 the textile and clothing to rejuvenate through the brand strategy (self-created jeans ERQ brand). The Changshu auto decoration invested by the company is expected to go on the market. Therefore, we estimate that the company's EPS in 2016 and 2017 is 0.38 yuan and 0.47 yuan respectively, and the corresponding RNAV is 11.1 yuan. Taking into account the company's fund-raising to enhance the staying power of development, we take the company's RNAV, that is, 11.1 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.
