Main points of the report
Event description
In 2015, Hyundai Investment operating income increased by 50.44% year-on-year to 6.516 billion, gross profit margin fell 9.53 percentage points year-on-year to 20.85%, and net profit attributed to the parent company increased by 38.29% to 567 million. The final EPS is 0.56 yuan, and the last year's EPS is 0.41 yuan. A cash dividend of 0.04 yuan (including tax) is to be paid per share.
Event comment
The Tanshan highway continues to return, and the subsidiary makes efforts to drive the growth of gross profit. The company's 2015 revenue rose 50.44% year-on-year, while gross profit margin fell 9.53 percentage points year-on-year to 20.85%, mainly due to the acquisition of Shanghai Wogu Metal Materials Co., Ltd. mainly engaged in spot trading of commodities, driving up revenue while driving down the company's overall gross profit margin. In terms of highways, the traffic flow of the Tan-Shan Expressway continued to flow back, the revenue increased by 7% compared with the same period last year, the gross profit margin increased to 57.5%, and the gross profit contributed 762 million; the "broken Road" of Xu-Huai Expressway was opened to traffic, and the revenue increased by 58.4% to 155 million; the income level of Changyong and Changtan section decreased, and when the traffic volume increased by 9.41% over the same period last year, the income increased by only 0.16% compared with the same period last year. In the end, the gross profit margin of the road transport industry fell 4.14 per cent year-on-year, achieving a gross margin of 1.149 billion, a slight decrease of 0.3 per cent year-on-year. The subsidiary performed well in 2015, with other businesses contributing 473 million of gross profit, with a combined net profit increase of 136% to 103 million year-on-year, resulting in a 3.25% year-on-year increase in gross profit.
Investment income and toll compensation contributed to a substantial increase in net profit. In 2015, the company's investment income contributed 145 million of the pre-tax profit, of which 76.83 million was gained from the disposal of financial assets, and 63.8 million was contributed by trust, entrusted financial management, entrusted loans and capital lending, all of which were generated by the recurrent business of subsidiaries. The overall investment income increased by 93.81 million over last year. On the other hand, the company received 46.16 million of the toll compensation in 2015, and the final non-operating income contributed 122 million of the pre-tax profit.
The main business of the highway is expanding, and the environmental protection, finance, commerce and trade auxiliary industries go hand in hand. In 2015, the company set up 12 new merger subsidiary companies. The main highway will continue to expand, and the company plans to contribute 665 million yuan to jointly build Huaizhi Expressway with Chengdu Huachuan. Among the newly established subsidiaries of the auxiliary industry, there are 3 environmental protection companies, 5 commercial and trading companies and 2 financial companies, and the environmental protection business has been expanded to Jilin, Jiangsu and other provinces. At the same time, the company plans to contribute 300 million, 320 million and 201.6 million respectively in 2016 to subscribe for 3%, 20% and 28% shares of Changsha Agricultural Commercial Bank, Xiangtan Tianyi Agricultural Commercial Bank and Lixian Agricultural Commercial Bank respectively. After subscription, the company will be the largest shareholder of Chengli County Agricultural and Commercial Bank, and the financial auxiliary industry will be further enhanced.
Maintain the buy rating. Taking into account the relative stability of the company's main business and the continued development of the auxiliary industry to provide future space and flexibility, we expect the company's EPS forecast for 2016-2018 to be 0.57,0.68 and 0.77 yuan respectively, maintaining a "buy" rating.
Risk hint: the income level of Changyong Changtan section has declined again; bulk trade has suffered heavy losses.