Main points of investment:

Events. On June 12, 2017, the company announced a letter of intent to cooperate with Guangzhou Shijing cement Plant and Guangzhou Changxian Real Estate Co., Ltd. to develop the "Food Cold chain Wisdom Port" project. It is proposed to build a comprehensive one-stop food industry cluster with complete exhibition industry chain, complete facilities and complete functions. To create a food headquarters industrial district with multi-functional integration of year-round exhibition and trade, conference and exhibition, commercial services, e-commerce, financial services, information release, R & D and design, personnel training and entertainment experience, it has become a national leading cold chain smart port complex of frozen food. The planned construction area of the project is 250000 square meters, covering an area of 200mu. It is planned that the size of the cold storage group will reach 100000 tons.

Relying on regional advantages, to create a cold chain smart port project, the original cold storage and market land is expected to be invigorated. In 2017, the company increased the pace of innovation and development, focusing on promoting the "Food Cold chain Wisdom Port" project. Relying on the advantages of industrial clusters in the Pearl River Delta and the convention and exhibition industry in Guangzhou, the company plans to meet the technological upgrading needs of the frozen distribution industry through the construction of a modern and comprehensive park, while attracting well-known food enterprises at home and abroad to stop. Make it become the international procurement center, headquarters and product R & D base for frozen food in South China. Through electronic information and network service technology, the Smart Port project will also extend the upstream and downstream value chains of the industry, build an e-commerce ecosystem, realize the real-time release of market price index, and build a settlement center and information service center for food enterprises in South China. If the food cold chain smart port project can be successfully landed, on the one hand, it will help to give better play to the company's management, service, technology and brand advantages in the cold chain industry, realize industrial transformation and upgrading, and improve the enterprise's core competitiveness and revenue ability; on the one hand, the revitalization of the company's original cold storage and market land is expected to accelerate, bringing strong capital guarantee for the company's sustainable development.

Investment advice and performance forecast. We believe that Guanghong (1) combined with the advantages of background resources, recent system optimization actions, regional national reform goals, the company's strategic upgrading demand is obvious. On the one hand, in the education industry, Guanghong has a leading channel advantage in Guangdong Province, strong cooperation in grafting educational resources and expanding product lines, relatively solid financial foundation, steady growth in income and profitability, abundant cash reserves, low debt ratio and other characteristics, financial strength to build a strong backing for transformation and upgrading. On the other hand, the company is not deeply involved in other areas of education industry other than teaching materials and teaching, and still needs to cooperate to shorten the learning curve. (2) valuation has a certain margin of safety: the company's original industrial land is in the process of urbanization in Guangzhou, Zhongshan, Panyu, etc. the possibility and necessity of changing land use and significantly increasing value is also in line with the inherent needs of the company's strategic upgrading and optimizing asset structure. The company's original double main business has a unique regional monopoly advantage, facing the background opportunity of consumption upgrading and steady growth of income and profit.

Based on the development trend of the existing business, regardless of the possible future capital operation, we predict that the net profit of the company in 2017 and 2018 is 127 million and 141 million respectively, and the corresponding EPS is 0.22 yuan and 0.24 yuan respectively. Combined with the valuation level of the listed companies in the same industry, the profit contribution of the two main industries of the company, and the background trend of the company's strategic upgrading, we will initially give 53 times PE in 2017, corresponding to the target price of 11.66 yuan per share, and maintain the buy rating.

Risk hint. The reform process and extension development of state-owned enterprises in Guangdong Province are not as expected; the risks of cold chain industry, publishing industry and so on.