Event: on the evening of August 23, 2016, Zhejiang Oriental released the 2016 mid-term report. according to the report, the company's operating income in the first half of 2016 was 2.62 billion yuan, down 18.5% from the same period last year, and the net profit belonging to the shareholders of the parent company was 390 million yuan. Year-on-year growth of 31.6% (the report data are all from the company announcement).
With the macro-economic downturn, the reform of state-owned enterprises brings opportunities.
(1) the main business of the company slows down. In the first half of 2016, the operating income of the company's commodity circulation business was 1.5 billion yuan (down 31% from the same period last year). At present, the pace of international economic recovery is lower than expected, and China's macroeconomic downturn has led to a decline in the prosperity of the real estate and commodity circulation industry. the growth rate of the main business has slowed down, promoting the company to actively innovate, develop financial business and cross-border e-commerce, and seek new business and profit growth points.
(2) the reform of state-owned enterprises brings development opportunities. The 13th five-year Plan proposes to integrate all kinds of financial resource elements, and the actual control of the company is the SASAC of Zhejiang Province. in the future, the company may take advantage of the background of state-owned enterprises, take advantage of the reform of state-owned enterprises, adjust the layout structure and optimize the allocation of state-owned assets resources. usher in the development opportunity.
The fixed increase is involved in a number of financial assets, and the layout of financial control is further deepened. On August 13, 2016, the company announced the announcement of issuing shares to purchase assets and raise funds. according to the announcement, the company intends to purchase 56% shares of Zhejiang Gold Trust, 100% equity of Dadi Futures and 50% equity of China and South Korea Life Insurance by issuing shares, with a transaction consideration of 1.6 billion yuan. At the same time, Zhejiang Oriental plans to raise supporting funds by raising no more than 1.2 billion yuan. In the future, Zhejiang Gold Trust, Dadi Futures and China and Korea Life Insurance will enhance the comprehensive competitiveness of the company's financial control platform, open up the company's capital sources, optimize the company's structure, and enhance the company's profitability.
Layout trust to open up channels for the use of funds. From January to May 2016, Zhejiang Gold Trust achieved an operating income of 33 million yuan, and the company's performance developed steadily. In terms of the industry, the downward trend of risk-free interest rates promotes a steady decline in industry risk, the new rules on financial management enhance the importance of the trust industry, and the industry's response to risk is lower than market expectations. Compared with other financial licenses, trust companies use funds most widely, including money market, bond market and other five major investment areas, which have advantages in business development and transformation and upgrading. Zhejiang Gold Trust is expected to develop in the future. And is expected to lead the company to open up channels for the use of funds.
Layout life insurance to improve the profitability of the company. From January to June 2016, China and South Korea Life achieved scale premium income of 730 million yuan, an increase of about 1.5 times compared with 290 million yuan in the same period last year. In the future, China and South Korea Life will achieve sustained and rapid growth of premium business income by expanding marketing channels and other ways, and then enhance the profitability of Zhejiang Oriental.
The company's financial license has been broadened in an all-round way. Based on Guojin Leasing, Oriental Industry and Finance and ITC Oriental Capital, the company carries out financial leasing, direct investment and capital management, providing services for its own transformation on the basis of investment innovation and business innovation. It is expected that by the end of 2016, corporate financial business will cover the Internet, financial innovation, overseas asset management, fixed growth market and asset management market. After the completion of the fixed increase, the company will further distribute integrated finance and comprehensively transform financial control through holding trusts, futures and life insurance.
Investment advice: buy-An investment rating, 6-month target price of 41.6 yuan. We estimate that the EPS from 2016 to 2018 will be 1.18,1.42,1.7 yuan respectively.
Risk tips: macro risk, business integration risk, policy risk