Event
Yesterday evening, the company released its 2017 semi-annual results report, with total revenue of 2.463 billion during the reporting period, down 2.67% from the same period last year; net profit of shareholders belonging to listed companies was 203 million, down 35.17% from the same period last year; after deduction, net profit of shareholders belonging to the parent company was 198 million, down 40.30% from the same period last year. In this regard, our comments are as follows:
Comments:
The gas sector grew well, and the exchange loss led to a sharp decline in net profit. The company's total revenue in the first half of 2017 was 2.463 billion, down 2.67% from the same period last year; the net profit of shareholders belonging to listed companies was 203 million, down 35.17% from the same period last year; and the net profit of shareholders belonging to the parent company was 198 million, down 40.3% from the same period last year. The decline in net profit is mainly due to the fact that some venture capital platforms concentrated their direct investment projects last year but did not this year. The investment income in the first half of the year was 272 million yuan, down 27.74% from the same period last year. At the same time, the RMB continued to appreciate this year, resulting in a partial exchange loss of 37 million yuan when the Hong Kong dollar funds raised by the company issued H shares at the end of last year. However, the profit level of the company's utility gas sector has maintained a good growth. specifically, the company's revenue in the first half of the year mainly comes from: 1) Gas sales, revenue in the first half of the year is 2.187 billion, up 6.01% over the same period last year; 2) Construction business, revenue in the first half is 107 million, down 49.42% from the same period last year; 3) sewage treatment business, revenue in the first half is 65 million, down 16.66% from the same period last year. 3) sewage treatment business, revenue in the first half of the year was 65 million, down 16.66% from the same period last year. 4) Commercial business, revenue in the first half of the year was 49 million, down 28.72% from the same period last year. 5) Municipal tunnel operation, revenue in the first half of the year was 7 million, down 16.66% from the same period last year. In addition, in the first half of the year, the company's sales expenses were 80 million yuan, an increase of 7.89% over the same period last year; management expenses were 144 million yuan, down 0.35% from the same period last year; financial expenses were 122 million yuan, an increase of 75.21% over the same period last year. The sharp increase in financial expenses was mainly due to fluctuations in the exchange rate of the Hong Kong dollar.
In-depth layout of the financial venture capital field, equity funds to complete foreign investment. In March 2017, the company joined the Shanghai Huaquan Equity Investment Fund Partnership (Limited Partnership) by accepting a subscription share of 90 million yuan and an additional contribution of 910 million yuan. This investment is to meet the requirements of the company's strategic development, with the help of the professional advantages of investment institutions to enhance the company's investment capacity. The fund raised 830 million yuan for the first time, and the company contributed 100 million yuan, accounting for 60.24%. In April 2017, Huacan Fund completed its first project with an investment of 800 million yuan and joined Yao Quru as a limited partner. The latter is a limited partnership initiated by Zhejiang Huatong holding Group Co., Ltd., a controlling shareholder of listed company Century Huatong, as a general partner, indirectly holding 47.92% of Shanda Game.
It is proposed to issue debt financing instruments at home and abroad, totaling no more than 6 billion yuan. On May 26, the company announced a preliminary plan for issuing debt financing instruments at home and abroad, totaling no more than 6 billion yuan. The funds raised will be used to supplement liquidity and project construction, while mergers and acquisitions of corporate projects with sufficient funds may be accelerated.
On the same day, the company issued a pre-plan announcement for the non-public issuance of exchangeable corporate bonds, which can be exchanged for the A-share exchangeable corporate bonds held by the company, raising no more than 1.5 billion of the funds.
Investment advice: give an overweight rating. It is estimated that the company's net profit from 2017 to 2019 is 4.35 yuan, 507 million yuan respectively, and the corresponding valuation level is 36,33 and 31 times. Based on the company's profit outlook, it covers us for the first time to give an overweight rating.
Risk hint: the progress of venture capital projects is lower than expected, and gas prices decline.