Summary of the report:
Lay out multiple forms of business and build an experiential shopping center
The company's main business is the operation and management of shopping centers, with rich experience in the retail industry and a large number of customer resources. In the face of the diversion brought by e-commerce, the company has built a variety of business forms, such as department stores, supermarkets, professional stores, catering and so on, focusing on the market positioning of community shopping centers, continuously expanding the experiential consumption model, and increasing the ability to gather customers. We believe that the company will continue to expand the proportion of experiential content such as "eat, drink and play" in the future, in order to increase customer flow and customer stickiness, strengthen core competitiveness and improve performance.
Join hands with CITIC Industrial Fund to invest in high-quality equity
Citic Industrial Fund has the leading management scale and ability in China. After the completion of this increase, it will indirectly hold 18.67% of the shares of the company, making it the second largest shareholder. Prior to this, the two sides have cooperated to invest in projects such as "singing bar" and "ele.me" to effectively assist the development of the main business at the same time. In addition, the company has set up a Zhuhai subsidiary, which is mainly engaged in equity investment and investment management. in the future, it is expected to explore high-quality projects for the purpose of financial investment and strategic cooperation, relying on the strong resource advantages of CITIC Industrial Fund. and focus on investing in related formats that can bring synergy to the main business.
BHG Retail Trust goes public, light asset strategy accelerates
The company's light asset operation strategy is clear. In 2015, it launched the BHG Retail Trust (REIT) in Singapore, with a size of about S $394 million. REIT holds stakes in five shopping malls sold by the company, which can bring rich trust income and management income to the company. In the future, the company may continue to sell mature properties to REIT and retain management rights, enjoy property value-added and operational management benefits, and improve cash flow. In 2016, the company transferred all its shares in three holding subsidiaries, including Beijing Hailong, to Wanrongrui (controlled by CITIC Industrial Fund), and was entrusted with managing the shopping malls of the three companies. in the future, it is expected to continue to improve asset liquidity and achieve capital recycling through such capital operations.
Catalyst
Steadily increase the introduction of CITIC Industrial Fund.
Profit forecast and investment suggestion
The company makes efforts to build an experiential shopping center and actively implements the strategy of light assets. after the introduction of CITIC Industrial Fund, it is expected to take advantage of its project resources to carry out investment in the main business-related business and cultivate new profit growth points. From 2016 to 2018, the EPS is expected to be 0.08 + 0.16 + 0.23 yuan, corresponding to the PE of 51-26-19, maintaining the "highly recommended" rating.
Risk hint
The progress of fixed increase is lower than expected, and the performance of equity investment projects is lower than expected.