Main points of investment

Event: according to the results forecast for the first three quarters of Mianshi Investment announcement, in the first three quarters of 2016, the company is expected to achieve a net profit of 120 million yuan to 130 million yuan (1.227 million yuan in the same period last year) and basic earnings per share of about 0.41 yuan (0.0041 yuan in the same period last year).

Comments:

The fluctuation of the performance in the third quarter does not affect the company's value. According to the results forecast for the first three quarters of Mianshi Investment announcement, the company is expected to make a net profit of 120 million yuan to 130 million yuan (1.227 million yuan in the same period last year) and basic earnings per share of about 0.41 yuan to 0.44 yuan (0.0041 yuan in the same period last year).

In the third quarter, the company lost about 8.79 million yuan to 18.79 million yuan, mainly due to the transfer of shares held by Lhasa Shenghao Investment Co., Ltd. in the first half of the year to realize profits from Guangzhou Huangpu Chemical Co., Ltd. the company calculated its share according to the proportion of shareholding, resulting in a substantial increase in profits in the first half of the year, while there was no such income in the third quarter, and the performance fluctuated normally. According to the median forecast, the company achieved a net profit of 125 million yuan in the first three quarters of 2016, significantly exceeding the level of 23 million yuan in 2015, and the annual performance is expected to maintain high growth.

The company continues to suspend trading and plans to plan major issues. Since the company suspended trading since the opening of the market on September 26, 2016, the company announced that this major planning event may constitute a major asset restructuring, which involves the real estate industry, including but not limited to issuing shares to purchase assets. We repeatedly emphasize that real estate stocks are the inevitable choice of incremental funds under the background of asset shortage. The company currently has a market capitalization of just over 4 billion, with plenty of cash and no interest-bearing liabilities.

Investment advice: the company is a typical "small and beautiful" company with no interest-bearing liabilities on its books, plenty of cash and a high margin of safety. At present, the equity incentive of the company has been awarded and completed, and the excitement is fully in place.

We believe that the company has broad prospects for future development. We estimate that the EPS from 2016 to 2018 will be 0.79,0.29,0.35 yuan respectively, and the corresponding PE will be 18.1,49.3 and 40.9 times respectively.

Risk hint: the real estate market transaction rebounded less than expected.