Events. The company publishes its semi-annual report for 2015. During the reporting period, the company realized operating income of 3.52 billion yuan, an increase of 38.9% over the same period last year; net profit belonging to shareholders of listed companies was 312 million yuan, an increase of 1.36 times over the same period last year; and basic earnings per share was 0.27 yuan.
The company's revenue increased by 39% in the first half of 2015, driven by an increase in property transfer and trade, and a higher gross margin for settlement expanded the company's net profit growth to 1.36 times. In June 2015, the company launched the process of state-owned enterprise reform, and the institutional dividend is about to be released. In the first half of the year, the company stepped up the transformation of the stock property. The company began to prepare for the start of the second phase of the International Machine tool Industry Park, and started the investment work of related buildings. In the first half of the year, the company focused on cultivating direct sales centers for imported goods. As of the first half of the year, Waigaoqiao Import Direct selling Center has opened 19 stores and signed 31 contracts, and has built a distribution center located in Nanhui Wujiao World Trade Mall, and flagship stores in the free trade zone are being renovated. In May, five national pavilions have been opened. In the first half of the year, the Senlan Waigaoqiao project has entered a comprehensive stage. First, the core business district of Senlan has started construction in an all-round way. At present, Sen Lan Shang du Phase II Commercial Street, D3-2 and other 5A office buildings, Harrow International School and Senlan International Art Island have all started construction. Second, international community housing is gradually entering the market, and sales fall short of demand. Senlan Mingjia residential project has been sold and is accelerating the development and construction of Senlan International Community site A5-1 (Senlan Mingxuan) and A12-1.
Investment advice. Under Prime Minister Li Keqiang's "opening up and forcing reform", Waigaoqiao and even the joint-stock company will become an important strategic core platform company in the world. At present, the construction of the free trade zone has become a national strategy, and the fundamentals of the company's Waigaoqiao will enter a substantial reversal stage. In the future, the company will focus on developing the first phase of the free trade zone, including the port area, logistics area, Senlan Middle Block and Southern Block International Community, in order to achieve "production-city integration". Among them, the Senlan project is 1.3 million square meters (785800 square meters has been started so far), which is expected to bring rich returns to the company. We estimate that the company's EPS in 2015 and 2016 will be 0.74 yuan and 0.91 yuan respectively. Compared with the revaluation of production factors under the Hong Kong free port policy, we expect that the company's asset value will significantly benefit from the promotion of the free trade pilot zone in the future, and will receive five major benefits: policy dividend, industrial upgrading, land price revaluation, positioning change and function upgrading. For this reason, we expect the company's RNAV to reach 42.72 yuan. As of August 31, the company closed at 24.84 yuan, corresponding to 33.6 times of PE in 2015 and 27.3 times in 2016. Considering that the company will benefit from the reform of state-owned assets and the construction of the free trade pilot zone in Shanghai, targeted financing will speed up the construction of the company's five major platforms, and taking into account that the average PE of listed companies in the Shanghai Free Trade Zone in 2015 is about 44 times, we use 60 times PE in 2015 as the six-month target price of the company to maintain the "overweight" rating.
Risk hint: the industry faces two major risks: interest rate hike and policy regulation.
