Event: the company released its annual report in 2016. during the reporting period, the company achieved operating income of 1.003 billion yuan, down 15.97% from the same period last year; realized net profit of-289 million yuan, down 301 million yuan from 13 million yuan in the same period last year; and realized non-net profit of-284 million yuan, down 39.90% from the same period last year.
The hotel business remains stable. At present, the company has 22 self-operated hotels and 43 hosting hotels, accounting for 91.65% of the revenue of the hotel business, which is the main source of income of the company. The revenue of the hotel business in 2016 was 920 million yuan, which was basically the same as last year after deducting the impact of revenue change, and the gross profit margin was basically the same as last year. The average occupancy rate of rooms is 63.6% higher than last year (62.4%), but the average house price is slightly lower, and Revpar is expected to be the same as last year. From the performance of each hotel, except for Beijing and Changchun hotels, most of the self-owned hotels are in a state of continuous loss.
The real estate business is dominated by destocking. Due to factors such as real estate policy and environment, the company slowed down real estate construction and reduced the number of properties available for sale. Revenue from the real estate business fell sharply (- 63.49%) in 2016, mainly from Huatiancheng, Zhangjiajie.
The company's 2016 performance was at an all-time low. In addition to the losses caused by hotels and real estate owners, the company also lost 98.36 million of its capitalized interest and impairment provisions in 2016, the lowest since it went public in 2007. From the perspective of the company's business, affected by the restrictions on public consumption, changes in market demand and depreciation and amortization of heavy assets, the company has made continuous losses in its main business in recent years, and the advance calculation of borrowing costs can reduce the depreciation pressure after the project is consolidated. It has a positive impact on the performance of subsequent years. The litigation of Jinfang Tower is basically over, and it is expected that all of it will be sold this year, because 38% of the equity mortgage held by the defaulting party is in the company, and the asset appreciation of Jinfang Building has been greatly increased as a result of the boom in the real estate market in recent years. there is a high probability that the provision for bad debts can be written off.
The new chairman takes office light and is expected to lead the company to turn around. Jiang Li, the new chairman of the company, quickly took office in April this year. Recently, the new chairman and the provincial SASAC led an intensive survey of the subordinate enterprises of the company, showing the urgent expectation of the provincial SASAC for the company to improve its business performance and turn losses into profits. At present, it is very difficult for the company's hotel business to have a fundamental improvement in the short term, and the real estate business is affected by the settlement cycle and cannot steadily contribute to profits. The most fundamental way to reverse losses is to continue to accelerate light capitalization operation. In the 2017 development plan, the company also mentioned to adjust the asset structure and dispose of inefficient assets. The company's own property is rich in accumulation, and generally acquired earlier, the book value is lower, revaluation room for appreciation is huge, is expected to begin to see results in the second and third quarters.
The company has a strong expectation of capital operation. It has been more than 17 months since the company last ordered an increase, and it is about to meet the new rule of the CSRC that the interval between financing is 18 months. The company's current asset-liability ratio is 66.66%. The financial expenses in 2016 are as high as 277 million yuan, which has a great impact on the company's profits, and the company's projects under construction have greater capital requirements. The company also mentioned in the annual report that it will optimize the company's financing structure, reduce the company's asset-liability ratio, guard against capital risks, and improve operating profit space.
Investment advice: the company's current share price is 5.54 yuan, with a market capitalization of 5.6 billion yuan, which is the same as the price increase of Huaxin Hengyuan in November 2015, which is at an all-time low in the past two and a half years. At present, the total value of the company's assets is about 10 billion, and the possibility of other capital operations of the company is not considered for the time being. assuming that the company operates assets at an annual rate of 10% in 2017-2018, according to the average gross profit margin of asset operation in 2013-2015, it is predicted that the EPS for 2017-2018 will be 0.19 PE 0.34 yuan, with a "buy" rating corresponding to 30 times 2018 PE.