Longjiang Transport released its 2017 mid-year report. In the first half of 2017, the company achieved operating income of 237 million yuan (-0.35%), net profit attributable to shareholders of the parent company of 181 million yuan (+9.10%), net profit of 178 million yuan (+13.38%) after deducting non-return to the mother, and earnings of 0.14 yuan per share.
Toll revenue is growing steadily. The company is mainly engaged in highway toll management. The Hada Expressway is 133 kilometers long. Road production conditions, supporting facilities and service levels are at the leading level among highways in the province. Stable toll revenue and abundant cash flow have provided the prerequisite and foundation for the company's steady development. During the reporting period, the company achieved toll revenue of 188 million yuan, accounting for 79% of total operating revenue.
Diversified development continues to be explored in depth. The company continues to promote a “diversified” development strategy, actively broaden business ideas, and explore good investment projects. The subsidiary “Longyun Hyundai” taxi operator is developing rapidly. In line with market changes, it actively takes strong measures to deal with the impact of online car-hailing, continuously explores management models to effectively improve performance in the “Internet+Transportation” environment, and contributes a stable and good return on investment to the company. During the reporting period, Longyun Hyundai achieved operating income of 45.97 million yuan and net profit of 1.07 million yuan. The company participated in Longjiang Bank (7.9677%) and achieved equity law accounting, which had a positive impact on the company's operating performance. Longjiang Bank achieved net profit of 1.12 billion yuan in the first half of the year.
The real estate project is progressing smoothly. During the reporting period, sales of the 040 plot developed by the company's subsidiary ICT Real Estate progressed smoothly. By the end of this period, the project had sold a total of 232 units, with a cumulative sales amount of 1,343 million yuan and repayment of 1,097 million yuan. According to the construction plan, the third phase of the project was constructed in July 2017, and the main project with four floors above ground was completed at the end of October. After the winter, work resumed in April 2018, and the conditions for completion and entry into households were met at the end of October 2018.
Investment advice: On the basis of ensuring the stable development of the main business, the implementation of the “diversified” development strategy has broadened the room for improvement in the company's operating performance. We expect the 2017-2018 EPS of Longjiang Transportation to be 0.24 yuan and 0.25 yuan respectively, giving it an “increase in holdings - A” investment rating, with a target price of 5.30 yuan for 6 months.
Risk warning: macroeconomic downturn, diversified development falling short of expectations, etc.
