Main points of investment:
Events. In the first three quarters, the company achieved operating income of 1.53 billion yuan, an increase of 254.2% over the same period last year; net profit belonging to shareholders of listed companies-530 million yuan; and basic earnings per share-0.57 yuan.
In the first three quarters of 2016, revenue increased by 254% due to a sharp increase in property carry-over, while net profit declined due to low gross profit margin and provision for impairment. From January to September 2016, the company started a project with an area of 4.99 million square meters, a decrease of 68.25 percent over the same period last year, and a completed area of 0.51 million square meters, a decrease of 72.73 percent over the same period last year. From January to September 2016, the company reached a contracted sales area of 2.037 million square meters, an increase of 219.78 percent over the same period last year, and 1.94376 billion yuan, an increase of 200.43 percent over the same period last year. From January to September 2016, the company's total real estate rental area was 31585.18 square meters, and the total rental income was 6343985.99 yuan. In July 2016, Tianjin Songjiang Co., Ltd., a subsidiary of the company, signed a framework agreement on strategic cooperation in smart city with the Management Committee of Jiangxi Fuzhou High-tech Industrial Development Zone and Tianjin Zhuolang Science and Technology Development Co., Ltd. In October 2016, the company agreed to the "proposal on the Investment Plan of Fuzhou Cloud Computing data Center and Smart City Construction Project" and signed the "contract for Investment and Establishment of Enterprises in Fuzhou High-tech Industrial Development Zone". In August 2016, the company transferred the Tianxi Park project under construction, withdrawing 184 million yuan. In August 2016, the company transferred the waterfront Tianyuan project under construction, withdrawing 725 million yuan of funds. In 2016, the company plans to invest about 2.64 billion yuan, including 2.06 billion yuan for real estate development and 580 million yuan for equity investment. Continue to increase investment in Wutai Songjiang City, Golf Town, Tuanpo West District Songjiang Star, Donghu Town, Jinbin Land Plaza, Songjiang Land Plaza, Southeast Corner Project, Dongjiang Port Project, Wuqing Yunhe City Cao Yuan Bei, Chai Guan Project, Guangxi Qinzhou Ningyue Garden, Ningyue Garden and other projects, at the same time, timely increase the scale of investment in health care, Internet and other fields. The company's real estate business plans to start an area of 370,000 square meters in 2016, with a completed area of 350,000 square meters, a contracted sales area of 170,000 square meters, and contracted sales of 1.6 billion yuan.
Investment advice. Expand financial leasing, health care and equity investment business, and maintain the "overweight" rating.
With the help of major shareholder trunk construction and first-level development strength (which helps the company to obtain secondary development projects at low cost), the company's real estate has formed a high-end market model for regional development along the trunk line. In addition to maintaining the competitive advantage in the suburbs of Tianjin, the company also expands non-local projects through the advantage of major shareholders. In the future, the company will attach importance to the balanced development of regions and product types. At present, the company's project reserve rights and interests are 3.37 million square meters, which can meet the development in the next three years. At present, the company is actively expanding into financial leasing, health care, equity investment and smart cities.
At present, the company's RNAV is 8.13 yuan per share. It is estimated that the company's EPS in 2016 and 2017 will be-0.29and 0.05RMB respectively. Consider the company's business situation, give the company RNAV about 10% discount of the 6-month target price, that is, 7.32 yuan, maintain the "overweight" rating.
Risk hint: the industry faces two major risks: interest rate hike and policy regulation.