Deep ploughing hotel and real estate industry for many years, accumulated rich assets. The company is a subordinate enterprise of Hunan State-owned assets Supervision and Administration Commission, deeply ploughing the hotel and real estate industry for many years, its own hotel property is more than one million square meters, at the same time, it has a lot of land resources in Hunan Province, and the total asset value greatly exceeds the company's market value. Although the overall prosperity of the high-end hotel industry is low, and most of the company's self-owned hotels are in a state of loss, the company's hotel property has appreciated with the appreciation of land and construction costs in recent years. at present, the operation direction of the company's hotel business is light capitalization, leasing or trusteeship after the sale of its own properties to enjoy the benefits brought by asset appreciation. At present, the company's self-built real estate projects are in a state of de-inventory, which will be dominated by cooperative development in the later stage, collecting land contract fees plus a certain proportion of real estate sales commission, which can not only enjoy the stable benefits brought by land appreciation, but also ease the financial pressure of the company.
Major changes in leadership, light assets operation or acceleration. Recently, there has been a major change in the company's leadership, and the new leader is young, energetic and has rich management experience. In view of the current situation of extensive losses in the company's main hotel industry, we expect the company's light assets operation to accelerate in the future.
Huaxin Hengyuan lock is more than half of the period, and there are expectations of capital operation. The second shareholder Huaxin Hengyuan participated in the fixed increase in November 2015 with a cost price of 1.65 billion yuan and a lock-up period of 3 years, which has now passed 1.5 years, and meets the CSRC's new rules on refinancing interval of 18 months, and there are capital operation expectations in the future.
Investment suggestion: the total asset value of the company is conservatively estimated at 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 2016-2018 will be-0.20 PE 0.34 yuan. For the first time, it is recommended to give a "holding increase" rating, corresponding to 30 times 2018 PE. The target price is 10.2 yuan.
Risk tips: the operation speed of the company's assets is lower than expected; the operating environment of the company's hotel business continues to deteriorate; the progress of the company's real estate business sales is lower than expected; the speed of completion of the company's projects under construction is lower than expected.