Events:
The company announces three quarterly reports for the year 17. In the first three quarters, the company achieved revenue of 885 million yuan (- 2.12%), net profit of 120 million yuan (+ 4.21%), basic EPS of 0.4332 yuan (+ 4.21%), and weighted ROE of 13.93% (- 0.55pct).
Comments:
1. Q3 performance declined slightly, basically in line with expectations
In the third quarter, the company realized operating income of 240 million yuan (- 11.4%), operating cost of 210 million yuan (- 14%), gross profit of 78.34 million yuan (- 3.6%) and gross profit margin of 27.2% (+ 2.2pct). The three expenses are 28.63 million yuan (- 6.3%), with good control; the operating profit is 49.98 million yuan (+ 4.6%), and the net profit is 38.65 million yuan (- 7.2%), which is basically in line with expectations.
2. Shanghai Free Trade Zone 3.0, accelerating the flow of people, logistics and capital in the region on March 31 this year, the State Council announced the "Plan for comprehensively deepening the Reform of China (Shanghai) Free Trade pilot Zone". It is the 3.0 version of the Shanghai Free Trade Zone plan after 13 years of "overall plan" and 15 years of "deep reform plan". In the report of the 19th CPC National Congress, General Secretary Xi clearly pointed out that the free trade zone should be given greater autonomy in reform and explore the construction of a free trade port. Through institutional innovation, the autonomy of the free trade zone has been further expanded, the management efficiency and service level are on a par with those of Singapore and Hong Kong, and the flow of people, logistics and capital in the region has been accelerated.
3. The ownership structure is balanced and the incentive for management to hold shares is sufficient.
The Sasac of Pudong New area controls 35.19% of the shares of the company and is the controlling shareholder and actual controller of the company. Yi Dian Group (Shanghai is a state-owned enterprise), Jiarong Investment (PE), China Eastern Airlines Financial Control (central enterprise), Changlian Investment (Shanghai is a state-owned enterprise) and senior management team hold 14.45%, 6.33%, 8.44%, 5.38% and 5.7% respectively, the ownership structure is fully diversified, and management shareholding straightens out the incentive system.
4. Profit forecast and valuation
We forecast that the company's annual EPS in 17-18-19 will be 0.37,0.40 and 0.43 yuan respectively, corresponding to the previous share price PE90.6/82.7/77.3X, the short-term valuation is on the high side, but considering that with the construction of Shanghai free trade port, the company's performance is expected to continue to grow, temporarily maintain the "highly recommended-A" investment rating.
5. Risk hint: high short-term valuation and lower-than-expected promotion of Shanghai Free Trade Port
