Key points of investment:
The company announced its 2017 semi-annual report. During the reporting period, the company achieved operating income of 435 million yuan, a year-on-year decrease of 22.6%; net profit attributable to shareholders of listed companies was 68.74 million yuan, a year-on-year decrease of 6.73%; and achieved basic earnings per share of 0.04 yuan.
In the first half of 2017, due to a decrease in real estate carry-over, the company's revenue fell by 22.6%; during the same period, the decline in net profit narrowed to 6.73% due to an increase in revenue reform and investment income. From January to June 2017, the company's industrial carrier operating model continued to shift from sales to leasing. In the first half of 2017, the company achieved real estate sales revenue of 286 million yuan, a year-on-year decrease of 33.42%, and realized real estate rental revenue of 115 million yuan, an increase of 10.95% over the previous year. During the reporting period, there were 5 projects under construction led by the company, involving a total construction area of 470,000 square meters. Among them, the “Shibei-One Center” project introduced “BIM” technology to “produce” construction products. The “Wedge Green Space Project” is positioned as an “industry-city integration” demonstration project integrating high-end commerce, smart office, ecological green space, and high-end pension; the development and construction of other projects such as the “13-05 plot project”, “13-06 plot project”, and “Shibei - Xiangteng Luyuan” is also progressing steadily. At the same time, the Nantong Xiangyizi County Project, which the company participated in cooperative development during the reporting period, plot 40-05, unit H, Yongfeng Street, Songjiang District, and plot 30-02, unit H, Yongfeng Street, Songjiang District, are also progressing according to progress. During the reporting period, the Juneng Bay Innovation and Entrepreneurship Platform, a national technology enterprise incubator under the company, had incubated a total of 192 nursery projects, 230 incubated enterprises, and 43 accelerator enterprises
In March 2017, the company successfully competed for plot 01-06, Unit N070501, Shibei High-tech Service Industry Park, Jing'an District, Shanghai. On March 18, 2017, the company announced that the company used its own capital to participate in the subscription of Huadong Construction Group Co., Ltd. (hereinafter referred to as “Huajian Group”, stock code: 600629) to issue shares to purchase assets and raise supporting funds, accounting for 0.32% of the total number of shares issued by Huajian Group.
Investment advice. Benefiting from the construction of data trading centers and science and technology innovation centers, equity investment is expected to grow rapidly. The company is positioned as a “boutique park” integrated operator, service integrator and investor. It has laid out 3.13 square kilometers of North High-tech Industrial Park in Zhabei City, Shanghai and 5.2 square kilometers of Nantong Science and Technology City Industrial Park. Currently, the economy of the Shibei High-tech Park is growing at a high rate of 30% per year, and the proportion of the productive service industry in the park has exceeded 90%. The company holds a total of 1.18 million square meters of equity. Meanwhile, in the next 5 years, the Shibei High-tech Park can develop 2.6 million square meters of land, and reserve 4,200 mu of land in Nantong. In recent years, the company has increased its investment in venture capital business, and future development can be expected. We expect the company's EPS to be 0.13 yuan and 0.17 yuan in 2017 and 2018. Considering that the company is within the scope of the Greater Zhangjiang River, it is expected to enjoy favorable policies such as the Shanghai Science and Technology Innovation Center and the construction of a data trading center (with market uniqueness) in the future, and also benefiting from the merger of the Jing'an and Zhabei regions, we gave the company a “buy” rating of 100 times PE in 2017, corresponding to the target price of 13.0 yuan for the next 6 months.
Risk warning: The company faces the risk that leasing and sales fall short of expectations.