Main points of investment:
According to preliminary estimates by the financial department, the company expects the net profit attributed to shareholders of listed companies to increase by 450 million yuan to 540 million yuan in 2017 compared with the same period last year (statutory disclosure data), an increase of 75 to 90 percent year-on-year. Net profit after deducting non-recurring gains and losses belonging to shareholders of listed companies will increase by 630 million yuan to 720 million yuan compared with the same period last year (statutory disclosure data), an increase of 110% to 125% compared with the same period last year.
According to preliminary estimates by the financial department, the company expects to achieve a net profit of 450 million yuan to 540 million yuan in 2017 compared with the same period last year (statutory disclosure data), an increase of 75 to 90 percent over the same period last year.
The corresponding earnings per share are 0.31 yuan to 0.34 yuan. We estimate that the company will achieve a net profit of 1.051 billion yuan to 1.141 billion yuan in 2017. According to the company announcement, the main reason for the pre-increase in the company's performance in 2017 is that during the reporting period, the company's real estate development projects have undergone rapid expansion in recent years, the change in the structure of settlement projects and the substantial increase in settlement area have greatly increased the carry-over income of real estate development projects.
Since 2017, the company has obtained a total of 817000 square meters of land reserve rights and interests. In 2017, the company plans to develop properties with an estimated new construction area of 2.57 million square meters, an opening and resumption area of 6.02 million square meters, and a completed area of 1.37 million square meters. In 2017, the company strives to achieve sales of 1.25 million square meters, with a contract amount of 20 billion yuan (including parking spaces). At present, the area of investment properties (including hotels) held and operated by the company in the core area of Beijing Asian Olympic Games is more than 1.2 million square meters. We estimate that the net profit contribution of the sales of the above properties is estimated to be 14.49 billion yuan, while the company's market capitalization is 17.7 billion yuan, which is undervalued.
Investment advice. Expand to the upper reaches of the convention and exhibition industry, increase and enhance the potential for development, and maintain the "buy" rating. The company's projects are concentrated in Beijing and Changsha and are involved in development, commercial and investment properties. The revaluation of the company's Beijing project benefits from the "Beijing Cultural Innovation Plan", with a precipitated value of about 72.46 billion yuan (net sales profit of 14.49 billion yuan). The company is a national leader in convention and exhibition business and is transforming to the upstream high-profit business. We estimate that the EPS of the company from 2017 to 2018 is 0.32 yuan and 0.45 yuan respectively, and the corresponding RNAV is 10.38 yuan. The company's stock price / RNAV discount rate is basically the lowest in listed commercial real estate companies. In addition, Beijing's bid to host the Winter Olympic Games has been successful. Considering the company's important performance in the Asian Games and Olympic Games, we expect Beichen Industry to continue to participate in the relevant work. Considering that on the basis of developing business, the company focuses on developing innovative businesses such as "convention and exhibition + Internet", healthy pension industry, cultural and creative industry, etc., giving the company a 10% discount on RNAV, that is, 9.34 yuan as the company's target price for the next 6 months, and maintaining the "buy" rating.
Risk hint: the industry faces two major risks: interest rate hike and policy regulation.