Main points of the report

Event description

Xiangjiang Holdings announcement 2016 semi-annual report, the main contents are as follows:

In the first half of 2016, the company achieved operating income of 1.912 billion yuan, down 17.73% from the same period last year, and net profit of 244 million yuan, down 5.25% from the same period last year. Non-net profit was 216 million yuan, an increase of 45.28% and 0.10 yuan for EPS.

Event comment

The carry-over decreased and the gross profit margin increased. During the reporting period, the company's operating income decreased by 17.73% compared with the same period last year, mainly due to a decline in the carry-over area, but the gross profit margin rose to 45.12% from 42.06% in the same period last year, resulting in a lower net profit than operating income. Moreover, the company's deducted non-net profit increased by 45.28% compared with the same period last year, indicating that the company's normal operating performance is still steadily improving.

If the level of debt decreases, the increase will be approved. At the end of the reporting period, the company's asset-liability ratio and real debt ratio fell sharply again, down 3.68 percentage points from the end of the first quarter to 66.86% and 57.33%. On April 11, 2016, the reorganization of the company was approved by the China Securities Regulatory Commission, and it is proposed to raise 2.35 billion yuan of matching funds, which will further strengthen the financial strength of the company.

The reorganization is progressing smoothly, creating a leader in home commerce and real estate. Since last year, the company has been planning restructuring, and plans to purchase home business property assets from related parties by issuing shares to pay cash, including Shenyang Haotiandi, Shenzhen Jiafu, Zhengzhou property, Changchun property and so on. At present, the major asset restructuring has been approved by the CSRC, if completed, the company will become the leading target in the field of home commerce in the A-share market.

Equity incentives ensure performance growth. The company launched the equity incentive plan in October 2015, which was completed in December last year. The unlocking condition of the equity incentive plan is that the growth rate of deducted non-net profit in 2016, 2017 and 2018 compared with 2014 performance is not less than 82%, 99% and 120%. The individual level determines the unlocking ratio of 1.0,0.5 and 0 according to the assessment results. According to the equity incentive plan, the company's non-net profit deducted in 2016 will be 484 million yuan, and the company's performance will be guaranteed.

Investment advice: the major shareholders' two rounds of asset injection also demonstrates their confidence in the development of listed companies, and the equity incentive plan protects the company's performance. It is estimated that the EPS in 2016 and 2017 will be 0.30 yuan and 0.34 yuan per share, respectively, and the corresponding share price will be 15.21 times and 13.68 times, respectively, maintaining the "buy" rating.

Risk hint: the progress of restructuring has risen slowly by 1.94%. On August 10, the average inventory of imported mines in the sample steel mills was 263300 tons, an increase of 100 tons over the last statistics, while the average inventory of domestic mines was 8700 tons, a decrease of 700 tons compared with the last statistics.