Main points of investment:
Business was good in 2015. The company's operating income in 2015 was 520 million yuan, up 13% from the same period last year, with a gross profit margin of 16%. Among them, commodity sales contributed 310 million, accounting for 59%, and real estate sales accounted for 100 million yuan, accounting for 20%. Before 2015, the company mainly focuses on real estate development. In 2015, business revenue exceeded real estate sales for the first time, mainly due to the company's capital increase in the same year. Shanghai Shanju International Trade has increased the proportion of trade in business.
Chongming Island leading enterprises, multi-industry development. Yatong shares has been the only listed company in Chongming Island since it was reformed and listed in 1993. In the course of more than 20 years of development, the company used to be the monopoly of water and land transportation in Chongming Island. With the rise in house prices and the completion of the Yangtze River tunnel, the company has been hit by surface transportation and turned to focus on real estate development. At the same time, the company has a long history of multi-line development. Since the 1990s, the company has experimented with ecological agriculture, high-tech agriculture and tourism, and has a total of 2500 mu of eco-agricultural land, providing potential for the company's follow-up development.
With the support of beneficial policies, there is great potential for the development of land reserves. Shanghai locates the development of Chongming Island as a modern ecological island. It is planned that by 2020, Chongming Island will gradually improve the development and construction of various regions and become a new island with the collection of international conferences, vacations and leisure, scientific and educational research and innovation, and new towns.
Chongming Island from the county district is expected to increase, the company is expected to benefit directly. Under the background of the country vigorously promoting the construction of modern ecological island, it has been inappropriate for Chongming to maintain the original county-level institutions, and the expectation from the county to the district is strong. If it can be landed, the promotion of the county will first make Chongming in a relatively more equal position with other regions of Shanghai, improve the status of Chongming in Shanghai, get the same treatment as the other 18 municipal districts, and lay the foundation for the further development of Chongming. Secondly, it will promote the balanced development of Chongming's primary, secondary and tertiary industries, which is more in line with the current level of development of Chongming. Consider that the company will participate in the construction of new towns on Chongming Island, which is expected to benefit potentially once the policy is landed.
In the management of keeping pace with the times, various departments complement each other. The company has a wide range of business, compared with the company operating a single business, this brings less downside risk. At present, the company has more than 20 shareholding subsidiaries. At the same time, Yatong shares continue to improve in terms of management and capital flow, and the functions of the subsidiaries include investment attraction, industrial operation, asset management (to achieve asset circulation and capital recovery) and self-investment. The company's gradual improvement in managing the entire business system will support the company's sustainable development in the future.
Investment advice: "overweight" rating. The 31st meeting of the standing Committee of the 14th Shanghai Municipal people's Congress will consider and vote on the draft decision on the withdrawal of counties and districts in Chongming next week. The withdrawal of Chongming county and the establishment of district will have a significant impact on infrastructure investment, housing prices and tourism development in the region. Considering the particularity of the company's operation and policy support, we refer to the comparable company Zhongfu Strait (Pingtan) to develop an average price-to-earnings ratio of 141 times over the past three years, and give Yatong shares a price ratio of 105 times earnings in 2016, with a target price of 19.95 yuan. Risk hint: the policy is not up to expectations.