Main points of investment

Event: the company announced that its revenue in the first half of 2016 was 361 million yuan, an increase of 17.45% over the same period last year, and its net profit was 3.7 million yuan, reducing losses by 142.73% compared with the same period last year. After deducting a loss of 11.88 million yuan (increased financial income in the current period), the loss increased by 9.98% compared with the same period last year.

Comments:

Travel agency business is growing rapidly, and hotel business continues to decline. During the reporting period, the number of people received by the company's travel agency increased by 16.11%, of which domestic / outbound / inbound travel increased by 31.70% / 35.93% respectively, revenue increased by 22.93%, hotel business reception decreased by 10.35%, and revenue decreased by 15.38%. Gross profit margin gradually stabilized, overall decline 0.56pct, of which travel agency business continued to decline slightly 0.08pct, hotel business rose 7.12pct; overall expense rate increased 0.21pct, but management / sales expense rate decreased 1.08/0.42pct, while financial expense rate increased 1.71pct.

The company's endogenous extension to alleviate the current operating difficulties. Plan to increase revenue and purchase the leading one-stop campus integrated marketing service company and professional full-case digital marketing service provider to enter the campus advertising and digital marketing business to enhance the company's profitability and alleviate the current business difficulties. At the same time, in cooperation with Hangzhou Saishi Garden Group to develop the Weishui Garden Flower Town project, the 68000 square meter commercial complex of the OUTLETS project was capped, and the ancient aquatic city scenic spot in Liaocheng, Shandong Province, renewed the trusteeship contract for one year, rented hotels with poor management ability, and promoted the integration of Internet and tourism business.

Profit forecast and investment rating: the company's existing main business has gradually stabilized, extension expansion has made progress, and the strategic layout of key projects "one heart, two wings, north and south echoes" has shown initial results. the acquisition of Sanren Bank to enter the campus advertising and digital marketing business and the high proportion of controlling shareholders to participate in the fixed increase, optimistic about the layout of this emerging business and the development prospects of the campus integrated service industry. At the same time, the company is expected to benefit from the overall plan of the free trade zone in Shaanxi. It is estimated that the EPS for 16-18 years will be 0.06 EPS 0.14 max 0.18 yuan (after considering this transaction, the EPS is 0.26 pm 0.37 max 0.46 RMB respectively), maintaining the "overweight" rating.

Risk hint: the progress of the fixed increase is not as expected, the company's existing main business continues to decline, and the competitive risk faced by the acquisition target.