Main points of investment
The company announced its results for the first three quarters of 2017, with revenue of 305 million yuan (+ 13.69%), net profit belonging to the parent company of 89.53 million yuan (+ 29.31%), and basic earnings per share of 0.97 yuan. In the third quarter of 2017, the revenue was 173 million yuan (+ 12.58%) and the net profit attributed to the parent company was 83.42 million yuan (+ 24.95%).
Dalian headquarters remains the main driver of revenue and profit growth. The Dalian headquarters project is operated by the parent company of the listed company, with 2017Q3 revenue of 231 million yuan (+ 20.99%) and net profit of 90.02 million yuan (+ 38.01%), significantly higher than the overall revenue and profit growth rate. In 2016, the company upgraded the Dalian headquarters to enhance the tourist experience, while improving the interaction and viewing effects of the core performance products this year, and stepping up marketing efforts, resulting in a significant increase in revenue and net profit.
The gross profit margin has increased steadily and the expense rate has remained stable as a whole. 2017Q3 gross profit margin 67.76% (+ 5.27pp.), period expense rate 27.15% (- 0.29pp.). We speculate that there are two reasons for the steady increase in gross profit margin: first, the operational efficiency of Dalian headquarters has improved after upgrading, and the gross profit margin of 2017Q3 Dalian has reached 71.76% (+ 6.48pp.). Second, the management output projects with high gross margins have been launched one after another. Wuhu and Huai'an projects were put into operation in September 2016 and May 2017 respectively, bringing income from marine animal export, management consulting services and so on.
The guarantee plan of 1 billion yuan was passed to ease the pressure on funds for external expansion. The company approved the 1 billion yuan external guarantee plan and used bank loans to provide financial support for Harbin Phase II Project, Yingkou-Chun'an Coastal City Project and Zhenjiang Ocean World Project. In the near future, the focus of the company's construction is still the Zhenjiang Magic Ocean World project, which is steadily advancing.
Profit forecast and investment rating: driven by Dalian headquarters, 2017Q3's revenue and net profit increased significantly, and the improvement of operating efficiency and the promotion of management output projects led to a steady increase in gross profit margin. The company continues to promote the "Moby Dick Project" and actively create the first original marine culture IP industry chain in China. It is estimated that the company's EPS in 2017-2019 will be 0.46 yuan 0.52 yuan, respectively, and the current share price corresponding to PE will be times that of 52-46-42, maintaining the "overweight" rating.
Risk hint: Zhenjiang project does not advance as expected; new project financing is not smooth
