Event summary: On October 13, the company released the performance forecast for the first three quarters of 2017.
During the reporting period, net profit attributable to the mother for the first three quarters is expected to be 101 million yuan to 119 million yuan, an increase of 114.21% - 152.39% over the previous year.
Core views:
Performance has maintained high growth, and the core advantages are prominent: the net profit of 2017Q3 is expected to increase 114.21% - 152.39% year-on-year, mainly due to the increase in sales revenue of the Qionghai Ruihai Haicheng project, which contributed to a significant increase in overall performance. As the only state-owned listed company in Hainan Province whose main business is infrastructure project construction, the company has rich experience in real estate development and highway project operation, and has remarkable brand and resource advantages.
The real estate business brand is prominent, and highway maintenance is highly competitive: the company's real estate projects are mainly concentrated in Haikou, Qionghai, Sanya and Danzhou. Currently, real estate revenue mainly comes from sales of the Ruihai Sea City Phase II project, which has a high reputation. In the first half of this year, the overall real estate market in Hainan was stable, volume and prices rose sharply, and regulation achieved results. The future will enter an era of high threshold and high quality, and the company will also fully benefit from the context of optimizing the structure of the real estate market. Second, the company is mainly responsible for the maintenance of Hainan's G98 Huandao East Expressway. It obtained the “Combined Road Surface Radar Vehicle” utility model patent certificate issued by the State Intellectual Property Office in March 2016, showing strong technical advantages.
Tourism services remain stable, and actively plan “big tourism, big health” to enhance internal value:
The company has 3 Treasure Island brand hotel chains, which are doing well. The company's future development strategy focuses on “big tourism, big health” and invests in the development of tourism complexes to form a big health industry ecosystem. In the era of mass leisure, we are optimistic about the company's strategic transformation and ability to operate and integrate with the advantage of regional resources.
Profit forecast and valuation: It is estimated that in 2017-2019, EPS will be 0.12 yuan, 0.17 yuan, and 0.22 yuan respectively, and the corresponding PE will be 64X, 45X, and 35X respectively. First coverage, giving a “Highly Recommended” rating.
Risk warning: Real estate sales fall short of expectations; investment returns fall short of expectations.