Event: the company announced three quarterly reports for 16 years, with revenue of 1.387 billion yuan in the third quarter, down 8.44% from the same period last year; net profit of shareholders belonging to the parent company was 12.75 million yuan, down 81.53% from the same period last year; and earnings per share was 0.03 yuan.
The carry-over of real estate projects reduces the drag on performance, and the company's ability to control fees is improved. The company's actual operating income in the first three quarters of 2016 was 1.387 billion yuan, down-8.44% from the same period last year, and the net profit of shareholders belonging to the parent company was 12.75 million yuan, down 81.53% from the same period last year, mainly due to the decrease in revenue carried over from real estate projects and the promotion of some existing commercial housing. As well as losses caused by some projects such as Beijing Wuyi. In the third quarter, ROE was 0.63pct, down 6.13 pct from the same period last year, and the gross profit margin on sales was 16.84% (previous value 31.47%), down 16.63 pct from the same period last year. The ratio of three fees has been significantly improved, and the company's ability to control fees has been improved.
The offshore RMB hit a new low and the company's remittance income expanded. The company's financial expenses for the current period were 41.39 million yuan (the previous value was 69.41 million yuan), down 41.01% from the same period last year, mainly due to the repayment of US dollar loans at the beginning of the period, the realization of exchange gains in the current period, and the large exchange losses in the same period last year. The yuan continued to depreciate in October, and as of October 27, the offshore yuan fell to a record low of 6.792, and the company's exchange earnings are expected to continue to expand in the fourth quarter.
Complete 100% holding of Beijing Wuyi, Tongzhou project performance lock is strong. In the first half of 16 years, the company held 100% equity after completing the acquisition of 10% equity interest in Beijing Wuyi Garden, and the demolition, establishment and construction of indemnificatory apartment in the southern area of Beijing Wuyi Garden accelerated. The southern area of Beijing Wuyi Garden is located in the core area of Tongzhou District, with a total construction area of 109.41 million square meters above ground and underground, with a collection of commercial housing, indemnificatory apartment, commerce, hotels, schools, kindergartens and supporting facilities. Among them, commercial housing accounted for 4510,000 square meters, indemnificatory apartment accounted for 65,000 square meters, commercial 710,000 square meters and others. At present, the construction of the basement structure of indemnificatory apartment has been completed in April, and the upper main body project is being promoted. The price of the new house is expected to be 46000, and the value of the project is 20.746 billion yuan, which is expected to provide a solid guarantee for the company's future revenue and profits.
The debt ratio fell further and signed a strategic agreement with the Export-Import Bank. And the asset-liability ratio continued to improve, falling 6.6% year-on-year to 80.95% (previous value 86.67%). The financial structure has been significantly optimized. In May, the company announced that it signed a strategic cooperation agreement with the Export-Import Bank of China, Fujian Branch, with a quota of 4 billion yuan. The Export-Import Bank of China will give priority to providing credit and a package of financial services for the company's foreign economic cooperation projects. help to ease the company's financial pressure and improve the company's financial situation.
The international project contracting project is progressing smoothly and has exceeded the annual target for half a year. By the first half of 16, the company had signed a total of seven new international projects, realizing the contract value of 2.483 billion yuan, an increase of 219% over the same period last year, and exceeding the target of 2.2 billion yuan over the past 16 years. Although there are no new contracted projects in the third quarter, the performance of the plate for the whole year has become a foregone conclusion.
The completion of the increase of major shareholders shows confidence, and the two shareholders disclose the plan to reduce their holdings. As of June 20, Fujian Jiangong, the largest shareholder of the company, had completed an increase in its holdings. Fujian Jiangong had accumulated 6.156 million shares of the company (excluding rights issue), accounting for 1.42% of the company's total share capital, accounting for 32.41% of the company's total share capital, with a cumulative increase of 94.88 million yuan, demonstrating confidence in the future development of the company. In September, the company's second largest shareholder, Energy Group, announced that it planned to reduce its holdings of 9.996 million shares of the company due to the adjustment of its asset structure, with a reduction price of not less than 14.50 yuan per share.
Investment advice: although the company's quarterly results have been dragged down, the internal financial structure has been optimized, thanks to the expansion of income due to the devaluation of RMB, and the strong development momentum of international engineering projects, which is expected to provide support for the company's annual performance. Major shareholders complete the increase, Beijing Tongzhou project performance lock is strong, the company's future development prospects are worth looking forward to.
We expect the company's EPS to be 0.14,0.36 and 0.48 in 2016-2018, with a PE valuation of 132.3X, 49.6X and 37.9X, maintaining a "buy-A" rating and a six-month target price of 22.1yuan.
Risk tips: overseas contracts and exchange risks, destocking pressure in second-and third-tier cities, and reduction of holdings by two shareholders.