Event

According to the 2018 semi-annual report released by Antong Holdings, 1H2018 realized operating income of 4.615 billion yuan, an increase of 79.8% over the same period last year, realized net profit of 338 million yuan, up 48.0% over the same period last year, and deducted non-return net profit of 292 million yuan, an increase of 31.2% over the same period last year, and basic earnings per share was 0.23 yuan.

18H1 multimodal transport logistics practice, a substantial increase in revenue and net profit

1H18's operating income was 4.615 billion, up 79.8% year-on-year, gross profit 651 million, up 31.3% year-on-year, and home net profit 338 million, achieving 48.0% year-on-year growth. We believe that the main reason for the substantial increase in revenue and net profit of the company is the investment in multimodal transport business since 2017 and the synergy brought about by the gradual release of railway resources, containers, shipping capacity and land transport capacity, resulting in a substantial increase in overall revenue. Among them, 2018H1 realized revenue of about 832 million yuan in the railway sector, accounting for 18.02%, an increase of 731.2% over the same period last year.

Overall, the initial investment in multimodal transport led to a gross profit margin of 14.1% for 1H2018, down 5.21pcts from the same period last year and 1.95pcts lower than at the end of 2017. In terms of fees, management expenses are 98.65 million, year-on-year + 31.3%, sales expenses 25.32 million, year-on-year + 280.6%, financial expenses 134 million, year-on-year + 37.6%. The company achieved an overall net profit growth rate of 48.0% and a net profit margin of 8.86%, a slight decline of 1.57 pct compared with the same period last year. The non-recurrent profit and loss of the company's 2018H1 mainly comes from the contribution of 66.295 million of the government subsidy.

Advance layout of multimodal transport

Shipping section: thanks to the increase in capacity, the number of ports attached to the company's route network has increased to 172, and the domestic trade container throughput ranks in the top three among 74 major ports, and ranks first in Haikou, Shihu, Huangdao, Nansha and Huangpu Laogang. Railway section: the company has set up 22 railway networks, including Harbin, Zhengzhou, Xi'an, Guiyang, Urumqi, etc., with more than 848 direct railway lines and more than 600sea railway lines, involving 672 railway stations, railway services cover 31 provinces and 155cities. In the first half of 2018, the transport volume of railway natural cabinets is about 23.46TEU. Multimodal transport base: the company has set up a total of 15 network points, 6 resident projects, 11 pledge warehouses and 7 cold chain warehouses.

Investment suggestion

We believe that Antong Holdings's diversified development strategies such as multimodal transport, integrated warehousing and characteristic logistics have entered a period of accelerated realization, and are constantly building a moat to achieve an average profit growth performance of the industry. Considering that the company will continue to expand its railway business on a large scale in 2018 and benefit from the development of multimodal transport, we expect the company to maintain a "buy" rating of 0.48, 0.57 and 0.68 yuan in 18-20 years.

Risk hint: the macroeconomic decline is higher than expected, and the multimodal transport, especially the railway layout, is lower than expected.