Main points of investment:
The company publishes its semi-annual report for 2017. During the reporting period, the company realized operating income of 1.99 billion yuan, down 55.0% from the same period last year; net profit belonging to shareholders of listed companies was 321 million yuan, down 8.39% from the same period last year; and realized basic earnings per share of 0.16 yuan.
In the first half of 2017, due to the decline in property carry-over, the company's revenue decreased by 55.0%. During the same period, the increase in investment income of the participating companies narrowed the decline in net profit to 8.39%. From January to June 2017, the company added 107000 square meters of land reserves; continued construction area of 3.2134 million square meters (including cooperation projects); sales area of 754200 square meters, sales amount of 7.223 billion yuan, received the balance of accounts received in advance of 9.889 billion yuan. In the first half of 2017, the company reached 754200 square meters of contracted area, with a cumulative sales amount of 7.223 billion yuan, continued construction of 3.2134 million square meters in the first half of the year, and 107000 square meters of new real estate reserve projects. During the reporting period, while medium-term leasing actively expanded its financial leasing business, it steadily expanded new business areas such as debt-equity linkage and equity investment. The company plans to build the company's first new energy industry park in Taizhou, Zhejiang Province. At the same time, Mingheng New Energy indirectly invested in 33% of Zhejiang Qianjiang New Energy Technology Co., Ltd., and officially entered the field of new energy technology research and development and production.
In May 2017, the company won a residential land of 107000 square meters in Nanchang. According to the company's 2016 annual report, the company expects 1.33 million square meters of new construction in 2017 and 800000 square meters completed this year, and plans to achieve real estate sales growth of no less than 20 percent over the previous year.
Investment advice. Fujian free trade zone and the "Silk Road" important target, "industry + capital two-wheel drive" is worth looking forward to. The company's development model is in line with the direction of new urbanization and is an important target of Fujian Free Trade Zone and the theme of "Silk Road". Sales of famous cities are expected to benefit from tax and financial benefits related to the free trade zone. The East Lanzhou Science and Technology New City project is in the core area of the Silk Road Economic Belt. At present, the company clearly creates the real estate plate and the financial plate two-wheel drive. The company has made it clear that it will actively explore new industries such as financial services, investment and trade, warehousing and logistics, and big culture and health. We estimate that the company's EPS in 2017 and 2018 is 0.39 yuan and 0.46 yuan respectively, and the corresponding RNAV is 9.05 yuan. Considering the great transformation of the company, we give the company a valuation of 25 times PE in 2017, that is, 9.75 yuan as the target price for the next six months, maintaining the "buy" rating.
Risk hint: the industry faces two major risks: interest rate hike and policy regulation.