Event
Hainan Expressway released an interim report in 2017, with revenue of 370 million yuan in the first half, an increase of 274.08% over the same period last year, gross profit of 161 million yuan, an increase of 140.70% over the same period last year, and net profit of 91 million yuan, an increase of 182.55% over the same period last year.
Ruihai Phase II volume, real estate performance showed exponential growth
The real estate business has become a new pillar. In 2010, the company fully integrated the real estate development plate and built the "Ruihai" real estate brand in Hainan. At present, the project is distributed in Haikou, Sanya, Qionghai, Danzhou and other places. In the first half of 2017, the real estate industry picked up, the company completed the second phase of Qionghai Ruihai Water City sales of 602 sets, sales area of about 42000 yuan, sales amount of 277 million yuan. In the first half of the year, the company's real estate business realized sales revenue of 292 million yuan, an increase of 1446.46% over the same period last year, accounting for 78.79%; gross profit was 107 million yuan, up 941.46%, accounting for 66.54%; but the gross profit margin was 36.71%, down 17.8 pct from the same period last year.
The transportation financial subsidy decreased slightly, and the investment income contributed greatly.
Highway access in Hainan is free of charge, so the company's transportation revenue comes from the financial subsidy of the provincial department of transportation. In the first half of the year, the company achieved transportation sales revenue of 59 million yuan, down 1.49% from the same period last year, accounting for 15.80%, and the gross profit margin was 65.99%, which remained stable. In terms of investment income, SAIC Group, which invested and participated in the company, achieved an investment income of 6.43 million yuan, benefiting from entrusted bank financial management, with an overall investment income of 19.48 million yuan, accounting for 16.95% of the total profit.
Adequate soil storage, transformed tourism + health + financial multi-line development
Looking forward to the future, 1) up to now, the company's real estate project land reserve of 1043.74 mu, the company will timely carry out real estate development according to the progress of the project; 2) with the help of the construction of international tourism island, the transformation is engaged in the investment, development and operation of marine leisure tourism, marine theme park, tourism complex, pastoral complex, characteristic accommodation, rural inn and other forms of investment, while integrating the large health industry. 3) with the help of financial services, capital operation and other means to promote the development of the company's health and tourism industry, and carry out exploratory value positioning through industrial funds and seed funds to achieve rapid transformation and great-leap-forward development.
Investment suggestion
Hainan high-speed transportation subsidy income is stable, real estate business land reserve is sufficient, and Ruihai Phase II will continue to sell volume in the second half of the year. We estimate that the EPS of the company from 2017 to 2019 is 0.13,0.14 and 0.15 yuan respectively, and the current share price is valued at 49, 44 and 42 times, respectively. The company is currently transforming into big tourism + big health + financial multi-line development, giving the company 55 times PE in 2017, with a target price of 7.15 yuan, covering it for the first time and giving it an overweight rating.
Risk tips: real estate industry risk, strategic transformation risk, idle land risk