Main points of investment:
The company released its quarterly report for 2017. During the reporting period, the company realized operating income of 4.09 billion yuan, down 40.6% from the same period last year; net profit belonging to shareholders of listed companies was 657 million yuan, down 17.3% from the same period last year; and realized basic earnings per share of 0.27 yuan.
In the first three quarters of 2017, the company's revenue fell by 40.6% due to the decline in property carry-over, while the increase in investment income of the participating companies narrowed the decline in net profit to 17.3% in the same period. Since the third quarter of 2017, the company has won a total of 147,000 square meters of land. On September 2, 2017, the company won a piece of land in Mawei District, Fuzhou. On September 12, 2017, the company won a piece of land in Xiaoshan District, Hangzhou City. On September 13, 2017, the company won 100% equity and 37.30859952 million yuan of debt transfer project of Shanghai Hangdu Real Estate Co., Ltd. Shanghai Hangdu Real Estate Co., Ltd. owns an industrial land located in Jinqiao, Pudong, Shanghai.
According to the company's 2016 annual report, the company expects 1.33 million square meters of new construction in 2017, with 800,000 square meters completed this year, and plans to achieve real estate sales growth of no less than 20% 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.
