Main points of investment:

According to the annual report released by the company in 2015, the operating income was about 2.8 billion yuan, down 22% from the same period last year; the total profit realized was-160 million yuan, down 181% from the same period last year; and the net profit belonging to shareholders of listed companies was-190 million yuan, down 431% from the same period last year. The company's main business development is in the doldrums, the transformation motivation is strong, and the acquisition of a series of financial assets under Wuhan Financial Control has also entered a critical stage, and is optimistic about the profitability and extension development potential of reorganized assets.

The downturn of the main business forces the financial control to transform, and the impairment provision lightens the burden of the transformation. The three main businesses of the company's retail, hotel and real estate all showed a downward trend. The profit of the retail industry was-15.64 million yuan, down 234% from the same period last year. The main reason for the decline was the market downturn, comparable store sales and gross profit margin fell compared with the same period last year. Liaoyang Friendship Mall is still in the cultivation period losses; hotel industry profits of 1.13 million yuan, down 29% from the same period last year The real estate industry realized operating income of 930 million yuan, down 46% from the same period last year, and realized profit of-94.98 million yuan, down 131% from the same period last year. The provision for inventory decline in real estate projects and the identifiable income and gross profit margin of the real estate industry in the current period are one of the main reasons for the company's performance losses. The depressed trend of the company's main business is difficult to reverse for a while, and the asset restructuring plan shows its determination to transform. This year, the asset impairment loss is about 270 million yuan, compared with 2.55 million in 2014, leaving room for this year's performance.

The reorganization of major assets has entered a critical stage, and the underlying assets have the potential of epitaxial development. The progress of major asset restructuring announced on February 18 is in the examination and approval stage of Wuhan SASAC and Hubei SASAC. After the completion of the relevant matters, it will enter the CSRC reporting stage. It is expected that major asset restructuring projects will receive relevant feedback and approval around April-May, which can be paid more attention to. If the asset restructuring is smooth, the supporting financing of 3 billion yuan will increase the capital of Wuxin guarantee Group by 2 billion, which will help it to obtain 3A guarantee qualification and further enhance the advantage of guarantee business. On the basis of the original guarantee and credit business, with the help of supporting financing to raise capital, it is expected that there is the possibility of promoting extension development, opening up the industrial chain from the asset side and the capital side, and providing comprehensive financial services, in order to achieve the diversification of income structure.

Maintain the overweight rating. Considering that the company's supporting financing increases the capital of Wuxin guarantee Group by 2 billion yuan, which has a greater support for its profits, the company's supporting financing price is 11.02 yuan per share, and the current stock price is already in the nearby range. It is estimated that the net profit belonging to the parent company from 2016 to 2018 will be about 6.57 yuan, 9.27 yuan and 1.232 billion yuan. The transformation and development brought about by the injection of financial assets and the increase in the business volume of Hanjin have been given to PE28~30. It is estimated that the company's market capitalization in 2016 is about 18.5 billion yuan, with an equity share of 1.288 billion shares. The current market capitalization is 14.2 billion yuan (examining asset restructuring and supporting financing), with about 30% and 40% room for growth. Generally speaking, small market capitalization, large performance flexibility and stock price safety, maintain the overweight rating.

Risk hint: asset restructuring is advancing less than expected.