Event

According to the results released by the listed companies in the first three quarters of 2017, the company achieved operating income of 4.473 billion yuan in the first three quarters of 2017, an increase of 70.6 percent over the same period last year, and a net profit of 365 million yuan, an increase of 41.41 percent over the same period last year.

Brief comment

The layout of "multimodal transport" has continued to increase, and revenue has maintained a high growth rate.

The company actively develops multimodal transport business and has become one of the most comprehensive multimodal transport enterprises with the most perfect layout in China. Since the third quarter, the company has successively opened railway transport lines such as "Qingdao-Ningxia", "Guizhou Fuquan-Zhanjiang Port", "Qingyuan Yuantan-Zhuhai Gaolan", "Yantai Fushan-Huangdao Port Station" and "Huangpu Laogang-Hunan Hengyang". Continue to improve the layout of the company's sea-rail intermodal transport network and aim at Southeast Asia in the field of foreign trade. Since the third quarter, foreign trade routes such as "Haikou-Philippines", "Haikou-Cambodia" and "Yangpu-Vietnam-Thailand" have been opened. The company's business network continues to increase, which is the main source of the company's rapid revenue growth.

During the period of business expansion, the cost is higher and the gross profit margin decreases.

The growth rate of the company's net profit is lower than the growth rate of revenue, we think it is mainly due to two reasons: first, although the price of the domestic shipping market has stabilized and rebounded since the third quarter, the overall price is still relatively low, and the freight price pressure is greater; second, the company's business is expanding rapidly, but the volume of new line business is not yet saturated, the unit cost is high at the initial stage of business expansion, and the company's overall gross profit margin has declined. The company's gross profit margin in the first three quarters was 16.36%, down nearly 3 percentage points from the first half of the year, while the third quarter gross profit margin was 12.38%, mainly reflecting the pressure on the cost side of the company's expansion phase.

High revenue growth is expected to continue, optimistic about the medium-and long-term development of the company

The stock price of the company has reached the target price given in our in-depth report on August 18, and we expect that with the gradual improvement of the layout of the company's transport lines and the gradual increase in the business volume of the new lines, the company's income level will continue to grow at a relatively high speed; at the same time, with the stabilization and recovery of freight rates, the downward trend of the company's gross profit margin is expected to be alleviated to a certain extent. The company's business layout in cold chain and special transportation is progressing smoothly, and we continue to be optimistic about the company's medium-and long-term development trend; it is estimated that the company's EPS in 2017-2019 will be 0.55,0.88 and 1.20 yuan respectively, corresponding to the current share price EPS of 42 times, 26 times and 19 times, respectively.

Risk hint: the progress of multimodal transport expansion is not as expected.