Core viewpoints
The performance maintained rapid growth, and the debt ratio dropped slightly. The company achieved an operating income of 10.24 billion yuan in 2017, an increase of 17% over the same period last year, and its net profit was 1.41 billion yuan, an increase of 68% over the same period last year. At the same time, the company's real debt ratio after deducting accounts received in 2017 fell to 65%, and the average financing cost dropped to 6.5% from 7.9% in 2016.
Real estate sales are growing steadily, ploughing core cities in advantageous areas. In 2017, the company achieved contracted sales of 15.06 billion yuan, an increase of 9% over the same period last year. The company's salable value is concentrated in the Yangtze River Delta and Fuzhou regions. The real estate market in the above-mentioned regions remains high, and it is expected that the project in the region will maintain a high removal rate in the future. In 2017, the company added 3.31 million square meters of land reserve, of which the rights and interests area is 275,000 square meters. In the regional layout, the company firmly implements the core strategy of focusing on second-tier cities, accounting for 65% of the new land reserves. Among them, the successful entry into Hangzhou market in September 2017 will help the company to further consolidate its traditional advantages in the Yangtze River Delta regional market.
The financial control business has developed steadily, and the "industry + capital" two-wheel drive development strategy has been continuously promoted. The company's revenue from financial investment and leasing business reached 1.21 billion yuan in 2017, an increase of 45% over the same period last year, with a gross profit margin of 46%.
By the end of 2017, the assets under management of Mingcheng Financial Control Group were 11.2 billion yuan, including 8.2 billion yuan for medium-term leasing, 2.1 billion yuan for securities investment, 550 million yuan for equity investment and 350 million yuan for financial investment.
In 2017, the company seized the opportunity of the cyclical industry and timely reduced its stake in Anada (002136) and made a return on investment. In addition, Yellow River property Insurance, the company's second largest shareholder, received business approval and applied for an industrial and commercial business license at the beginning of 2018.
Financial forecasts and investment suggestions
Maintain the "buy" rating and adjust the target price to 10.08 yuan (the original target price is 11.13 yuan). We predict that the EPS of the company in the next three years from 2018 to 2020 will be 0.72, 0.91 and 1.14 respectively. The average valuation of the comparable company in 2018 is 14X, which gives the company a valuation of 14X in 2018, corresponding to the target price of 10.08 yuan.
Risk hint
The company's real estate sales fell short of expectations.
The company's financial investment fell short of expectations.