Transformation and expansion are involved in multiple fields. Liaoning Chengda was founded in 1993, the company's controlling shareholder is Chengda Group (11.11%), and Liaoning SASAC is the actual controller of the company. The company has transformed and expanded several times since 1999, and has been involved in many fields such as finance, pharmaceuticals, bio-pharmaceuticals, energy development, and so on. The macroeconomic downturn and the sharp drop in oil prices since 2014 have led to a slowdown in the company's performance. It is expected that the traditional sector of the company will stabilize in the future, the financial sector will continue to enhance the value of the company, and the new shareholders brought by the increase will also boost the overall strength.
Financial sector securities and insurance two-wheel drive. The company has been involved in GF Securities Co., LTD. (16.4%) and China Insurance (19.6%). Since mid-2014, the contribution of investment income from the financial sector has remained at a high level of more than 70% of total profits. Securities and insurance two-wheel drive, Liaoning Chengda financial sector is expected to continue to enhance the value of the company and promote the development of industry-finance integration in the future.
(1) the rapid development of China Insurance. ① China United property insurance premium growth rate is higher than the industry level, market share industry ranks fifth. China Insurance mainly focuses on property insurance. From 2013 to 2015, the growth rate of China United property Insurance business income was more than 17% year on year, which was higher than the industry growth rate (the industry growth rate was between 11% and 16%). At the same time, property insurance business led to performance growth, and China Insurance net profit grew by 30% in 2015. In addition, the market share of China property insurance premium income reached 4.16% in 2016, ranking fifth in the country. It is expected that in the future, China Insurance will develop life insurance on the basis of maintaining stable property insurance performance, combined with the advantages of the investment side, to achieve steady progress. The shareholder advantage of ② China Insurance is obvious. The largest shareholder of China Holdings is Oriental assets, and the second largest shareholder is China Insurance Fund, both of which are state-owned, have strong capital and platform advantages, and play a positive role in extending the product line of China Holdings. At the same time, it can provide rich resources for its development. ③ China Insurance will continue to provide investment income for the company. The investment income contributed by China Insurance accounted for more than 30% of Liaoning Chengda's total profits in the first half of 2016, and it is expected that China Insurance will contribute about 400 million yuan to the company's profits from 2017 to 2018.
(2) GF Securities Co., LTD. makes a great contribution to profit. ① GF Securities Co., LTD. contributes greatly to the investment income of Liaoning Chengcheng. Liaoning Chengda holds 16.4% of GF Securities Co., LTD. 's shares, ranking firmly in GF Securities Co., LTD. 's top three shareholders. GF Securities Co., LTD. 's contribution to investment income accounts for more than 70% of Liaoning Chengda's total profits. ② GF Securities Co., LTD. 's comprehensive strength is in the forefront of the industry. In 2015, its operating income (No. 4), net profit (No. 5) and net capital (No. 4) were all in the leading position, and its relatively strong capital strength promoted the development of various businesses of the company. GF Securities Co., LTD. 's stock ranked first in the industry in 2015, and the investment banking business has outstanding advantages. ③ GF Securities Co., LTD. provides market capitalization support for the company.
As of March 6, 2017, GF Securities Co., LTD. 's total market value was 130.7 billion yuan, while the market value of Chengda contribution in Liaoning Province was about 21.4 billion yuan. At present, the total market capitalization of Chengda in Liaoning is 26.8 billion yuan, which is only 5 billion yuan less than that of GF Securities Co., LTD. 's contribution. Therefore, we think that GF Securities Co., LTD. provides a strong support for the company's market capitalization.
Diversified business has a wide layout and steady development. The performance of ① energy development has gradually improved. Due to the sharp drop in international oil prices, the growth rate of the company's oil shale business has slowed down, but the impact of Chengda Hongsheng's impairment has been basically reflected, Xinjiang Baoming technology has made progress, and future performance is expected to improve gradually; ② biopharmaceutical profit growth is stable. Chengda Biology has now listed the new third board, and its net profit has maintained steady growth since 2014, and it is expected that the profit in 2017 will be basically the same as that in 2016. ③ trade circulation industry adjusts Xu Li's future development. Since 2012, the operating income of commercial circulation accounts for more than 80% of the company's total operating income, which is the main component of the operating income. The company disposes of Carrefour's equity to carry out industrial adjustment to accumulate strength for the company's next development.
Fixed increase to introduce new shareholders. On August 10, 2016, the company released a revised version of the fixed increase plan, which intends to issue no more than 320 million shares to state-owned companies, Giant Investment, Jinhui Capital Management and China Europe Logistics. The fixed increase will bring about a change in the ownership structure, under the premise that the shareholding ratio of the control group will remain unchanged (9.18%, the same below). The introduction of new shareholders such as Giant Investment (7.84%), Jinhui Investment Management (4.33%), China Europe Logistics (4.33%) and Liaoning State-owned assets Company (4.33%) will definitely be increased for a while.
Investment advice: buy-An investment rating, 6-month target price of 22.87 yuan. We estimate that the EPS of the company from 2016 to 2018 is 0.68,1.12,1.45 yuan respectively.
Risk tips: macro risk, market risk, oil price risk