Main points of investment

Event

On March 12, 2016, the company released its annual report of 2015. during the reporting period, the operating income reached 2.79 billion yuan, down 22.33% from the same period last year. The net profit belonging to shareholders of listed companies was-188 million yuan, down 431.31% from the same period last year, and basic earnings per share was-0.52 yuan, down 425% from the same period last year.

Comment

The company's profit was lower than we expected, mainly due to the substantial increase in the impairment loss of the company's assets. During the reporting period, the company comprehensively considered the market situation, sales, etc., for the holding subsidiary Dalian Shengfa Real Estate Co., Ltd., the wholly-owned subsidiary Handan Faxing Real Estate Development Co., Ltd., and Shenyang Xingshi Real Estate Development Co., Ltd., a price reduction provision of 260 million yuan was made.

The company's existing main business includes retail, real estate, hotel three main businesses. The retail industry has been hit by e-commerce, resulting in a slowdown in revenue growth, increased costs and declining profitability. The inventory of the real estate industry is high, and the industry has entered a slow de-inventory cycle, which forms great pressure on the real estate enterprises in small and medium-sized cities. The operating income of the hotel industry has declined.

During the reporting period, the company actively sought transformation and planned to purchase Wuhan Financial Control's guarantee, credit, credit information, Internet finance and other integrated financial assets through a non-public offering of shares. the transaction consideration is 6.274 billion yuan, and the performance commitment for 2016-2018 is not less than 638 million, 753 million, 862 million.

After the completion of the transaction, the main business of listed companies will add guarantee, credit, credit information, Internet finance and other businesses, with "finance +" as the overall strategy, to provide a full range of "commodity + financial" services and support to department store retail supply chain, commodity and housing consumers, real estate developers and property operators from the front to the later stage, and the income scale and profitability of listed companies are expected to be significantly improved.

Profit forecast: assuming that the acquisition of assets and supporting funds by additional shares are successfully completed in 2016, the total share capital of the listed company is about 1.288 billion shares, and the net profit of the listed company in 2016 and 2017 is forecast to be 754 million and 816 million yuan, respectively, with a corresponding PE of 0.59 yuan and 0.63 yuan respectively, and the share price before the corresponding share price is 18.7 times and 17.5 times respectively.

Risk tips: the impairment of the company's assets aggravates the risk, the risk of major asset restructuring is not approved, and the proposed acquisition