Events:
In the first three quarters of 2016, the company achieved operating income of 1.027 billion yuan, an increase of 1.44% over the same period last year. The net profit attributed to shareholders of listed companies was 147 million yuan, an increase of 8.56% over the same period last year. The non-net profit was deducted from 119 million yuan, down 9.24% from a year earlier.
Comments:
The overall operation of the company is sound, in which the animal husbandry industry has maintained relatively stable growth, the catering industry has declined slightly due to the reduction of the number of stores, and the funeral business is basically in line with the expected growth due to the increase in average sales unit prices.
The company increased its capital to its Australian subsidiaries twice in 2016, with a total investment of 285 million yuan by the end of September. The four Australian farms invested have abundant annual rainfall, with a total area of more than 500000 mu, which is suitable for animal husbandry, feed and other crops. The largest farm, Woodlands Farm, has a natural grazing capacity of 12000 beef cattle, with a total of about 10000 Angus cattle and cattle. The high-quality beef cattle breeds in Australian pastures help to improve the quality of the company's animal husbandry products, improve the production and management chain from animal husbandry to slaughtering, quickly dock products and output and form effective supply.
The company's funeral service industry has made steady progress in accordance with the plan at the beginning of the year, the new sales branch has expanded the sales force, and the sales unit price has increased somewhat. The average unit price has exceeded 65000 yuan, an increase of more than 30% over the same period last year, and the gross profit margin continues to remain above 80%. Is the company's main profit point. The funeral business has promised to achieve a net profit of 102 million yuan over the past 16 years, and the business development is basically in line with expectations.
In addition, the company's industrial M & A fund jointly signed an agreement on capital increase and equity transfer with Yixing Longli Cemetery and Yixing Yunze Culture and Art Development Co., Ltd. on September 28, 2016, a total investment of 200 million yuan, holding 60% of Yixing Longfu Cemetery Co., Ltd. The company continues to make efforts in the field of funeral business, and its profitability is expected to be further enhanced in the future.
The target price is 18 yuan to maintain the "overweight" rating:
We predict that the EPS of the company from 2016 to 2018 will be 0.27,0.32,0.38 yuan respectively, and the target price will remain unchanged at 18 yuan, maintaining the "overweight" rating.
Risk Tips:
Beef cattle breeding epidemic risk; catering business food safety risk.