Investment events:

2015 the company's total revenue was 1.25 billion yuan, down 16.25% from the same period last year, and the return profit was-163 million yuan, down 196 million yuan from 32 million yuan in the same period. In September 2015, the company planned a major asset restructuring and proposed to issue 215 million shares to purchase a 100% stake in the rental car network, with a commitment of 122 million, 189 million and 242 million net profits attributable to the parent company from 2016 to 2018, respectively.

Summary of the report:

Affected by the macroeconomic environment and e-commerce, the company's main retail business continues to decline. The macro economy continues to slow, the overall consumer market is in the doldrums, offline physical stores compete fiercely, homogenization is serious, and online e-commerce strongly diverts the purchasing power of the retail market, eroding the only remaining market share of the department store industry. Affected by many factors, the company's commercial business revenue has declined sharply, and the operating cost is high, which directly leads to a 16.25% year-on-year decline in total revenue and a loss of 163 million yuan in return profit.

With a large number of scarce licenses and cross-district service network, it is expected to win in the blue sea market of car rental. The scale of the car rental market is expected to reach 65 billion yuan in 2018. At present, the industry concentration CR5 is 14%, and the car rental penetration rate is 0.40%. The market space is huge and the industry competition is just beginning. Car rental industry license plate resources are relatively scarce, it is appropriate to rent 2192 self-operated vehicles, and plans to add 4000 vehicles by 2018, with a large number of license plate resources, forming a competitive barrier. At the same time, it is appropriate to establish a car rental industry alliance to break the regional boundaries that the traditional car rental enterprises can not cross, and form a cross-regional service network. With the advantages of many people, the company is expected to stand out.

It is appropriate to rent on the basis of car rental business and derive a variety of business models based on car networking. It is appropriate to rent in the upper and middle reaches of the industry, and downstream customers are Internet car rental platforms, car rental companies and so on. In 2015, China's short-distance travel market will reach 900 billion yuan, and the market share of chauffeured cars is only 0.61%. Renting will benefit from the huge replaceable travel market downstream. As the carrier of the vehicle networking platform, the automobile is the port to collect data. In the future, the automobile will become an important entrance to the Internet application, carrying different consumption scenarios. Suitable rent can carry out a variety of business models through the construction of a car networking platform.

Investment suggestion: assuming that the asset restructuring is carried out as scheduled and completed within 2016, taking into account the exam preparation results and the consolidation time, the company is expected to have an "overweight" rating of RMB 0.04 EPS 0.28 yuan in 2016 and 2017, corresponding to a rating of 58.61 times PE 410.25 pound.

Risk hint: the progress of asset restructuring is lower than expected, and the original main business continues to lose money.