Events. The company released its third quarterly report for 2015. During the reporting period, the company realized operating income of 710 million yuan, an increase of 21.6% over the same period last year; net profit belonging to shareholders of listed companies was 31.01 million yuan, down 37.86% from the same period last year; and basic earnings per share was 0.04 yuan.
Revenue increased by 22% in the first three quarters of 2015, driven by new agricultural materials, while net profit grew negatively due to reduced VAT returns in the wood industry. In July 2015, the company released the first phase of employee Stock ownership Plan (draft).
Investment advice. Increase the amount of funds raised to promote the transformation of the company's business strategy and maintain the "overweight" rating. The completion of the additional investment project will improve the company's tourism development and medical service capacity, and lay the foundation for the company's strategic transformation. The company has formed a development pattern of "forest-board integration". At present, it has a forest area of 1 million mu, an annual output of 15 million pine seedlings and an annual fiberboard capacity of 450,000 cubic meters. The company's projects in Pingtan are promoted in an orderly manner, and the benefits are initially reflected. Among them, Zhongfu Building Materials City in the second half of the year pre-sale; concrete project has been put into production and sale; Pingtan Zhonghui small loan company has shown benefits; the company won the bid for Jinjingwan, eastern sewage treatment plant BT project. It is estimated that the company's EPS in 2015 and 2016 will be 0.27 yuan and 0.55 yuan respectively. As of October 30, the company closed at 20.48 yuan, with a corresponding dynamic price-to-earnings ratio of 75.9 times and 37.2 times respectively. Considering that the company's performance in 2016 will not be released, and considering that the company is a listed company registered and directly benefiting from Pingtan Experimental Zone, with reference to the average valuation of the 2016 PE of the direct beneficiary target of Shanghai Free Trade Zone, we can see that the company has a reasonable valuation of 22.55 yuan and maintains the "overweight" rating.
Risk hint: the industry faces two major risks: interest rate hike and policy regulation.