Core viewpoints

Real estate business bottomed out and rebounded, and profit growth ushered in an inflection point. Sanxiang impression is a green technology real estate developer in Shanghai, deeply excavating the cultural core and expanding the dual main business of "culture + real estate". 2019Q1 achieved an operating income of 1.31 billion yuan, an increase of 649.0% over the same period last year, and a net profit of 380 million yuan, an increase of 579.2% over the same period last year. In a single quarter of Q1, the company's revenue has reached 80% of that of 2018. We believe that in addition to the sales carry-over in 2018, the new sales in 2019 are expected to help the company achieve sustained growth, and the real estate business has bottomed out.

Create a green intelligent life service, speed up the de-industrialization of the project on hand. The company's current properties for sale focus on the core areas, including Shanghai, Hangzhou East New Town and Hebei Yanjiao, focusing on improved products with green technology building design logo, which is expected to be accelerated in the future. Among them, Hangzhou Haishang View Mansion has a sales area of 120,000 square meters; Pudong Qiantan Sanxiang impression residence project planning construction area of 54,000 square meters is expected to be completed and sold in 2019. At the same time, Hebei Yanjiao project is also accelerating. Assuming that the Yanjiao project is rapidly eliminated in the next few years, it is expected to increase the cumulative investment income by nearly 1.8 billion and become the main source of profit for the real estate business.

Create "domestic high-end cultural tourism performing arts content creation organization" and increase the expansion of cultural tourism real estate. The tourism cultural performing arts products of viewing impression cover two types of landscape live performance and situational experience drama, and have four major performance brand series: "impression", "see again", "most recall" and "return". At present, there are a total of 17 public performances, production and signing projects. It is expected that in the future, five contracted projects will be accelerated to speed up the realization of public performances to contribute to revenue. At the same time, the company will participate in the Wellcome Golden staff with 300 million yuan, and will cooperate with it in the Yangtze River Delta to jointly create international tourist resorts and related leisure products with cultural and creative industries as the core, and promote the upgrading of regional cultural tourism industry. the transformation to a cultural and tourism industrial park is accelerated.

Financial forecasts and investment suggestions

For the first time, the buy rating is given, with a target price of 6.02 yuan. We predict that the company's EPS per share in 2019-2021 will be 0.86 soybean 1.03 yuan per share. With short-term reference to the average valuation of comparable companies, we will give a buy rating of 7 times PE in 19 years, corresponding to the target price of 6.02 yuan.

Risk hint

The development of real estate business is lower than expected, the pace of land acquisition is lower than expected, and the business of cultural industry is lower than expected.