1. The basic introduction of the company:

The company focuses on third-and fourth-tier cities in China, and selectively enters second-tier cities to develop and operate large-scale trade and logistics centers. As of December 31, 2013, the company has simultaneously developed 10 trade and logistics center projects in seven provinces and autonomous regions in China, six of which are large-scale trade and logistics centers. According to the latest information from Savills, Yide Holdings ranks first in China in terms of the number of large trade and logistics centers, while Yide Holdings ranks second in China (South China City ranks first) in terms of the estimated and uncompleted total floor area of large trade and logistics centres. As of December 31, 2013, Yide Holdings owns a total land reserve of 7.83 million square meters.

2. Ownership structure and dividends:

60% of the Wang family and 14.89% of Hony. Hony bought shares for $80 million in 2001 and acquired 600m shares, which expire in 2016.

In 2013, the company's dividend ratio was 43%. The company's dividend mainly depends on the wishes of major shareholders. Hony also prefers a high dividend ratio, which is limited to 50% of the core profit in the IPO document.

The decline in share prices in the early period is mainly related to the lifting of the ban on cornerstone investors in IPO.

3. Profit model:

With the promotion of urbanization in China, the old urban areas of third-and fourth-tier cities / county-level cities have been demolished and new urban areas have been set up. The company acquires land to build a wholesale market in the new urban area with the approval of the local government, and the company usually signs an exclusive agreement with the local government for five years, that is, other developers are not allowed to build the wholesale market for five years. The bidding price of the land is 700 yuan / square meter, and the preferential price to the company is about 300 yuan / square meter. The land price difference will be returned one month after the payment of the land, and the tax preference will be returned later. (the government rebate of 895 yuan in gross profit in 2013 includes tax.) after the project agreement is signed, a project leading group composed of mayor and municipal party secretary will be set up, with the Land Bureau and the Finance Bureau as members of the project team and the members of the company as team leaders.

The company has established a new trade and logistics area in the new urban area, with a general floor area of 2 million square meters, of which 50% is used as shops. The first phase is mainly used to replace the small and medium-sized enterprises (SME) in the old city, and the second phase is open to investors.

15% of them are used as warehouses and later built as holding properties, which can be rented to SME; moved to the old city, 15% as office buildings, 10% as residential buildings, or The Business Inn, food court, etc.

4. Calculation of investment cost and cash flow:

With the first phase of the development of 500000 square meters, 300 yuan per square meter to take the land price, the registered capital is 150 million yuan, the construction is completed in June-September, it is sold at 5000 yuan per square meter, the house is handed in in December-18 months, and the cash payment is received in 3 quarters, which is much larger than the project payment.

5. The core competitiveness of the company:

In general, the government gives projects, and the Investment Commission finds experienced developers to develop and build new wholesale markets. After getting the project, the company will investigate the old market, communicate with SME, and plan how many shops will be built according to 1 SME corresponding to 1.8 sets of new urban shops in the old city. Through the investigation of the old city, it is found that the working environment of the shops in the old city is relatively poor, crowded (1-2 square meters), SME cooks with an electric magnet stove, eats and sleeps in the shop, which is easy to catch fire. And the old city shops 40-50, 000 per square meter, there is usually no price, no property rights, worried about rising rents. Through the new town shops can effectively replace the old city SME upgrade replacement demand.

The core value of the company is how to persuade the old SME to move to the shops in the new city, which is the hardest part. The company will organize a sales team and recruit about 100 local girls to train to become qualified sales, usually one person is responsible for 5-6 SME, to chat with SME to establish a good relationship. The company's marketing strategy is to let the market have a psychological price before opening, which is about 10,000 yuan per square meter. The day before the opening, the vice president of marketing announced to the salespeople the real opening price of 7000 yuan / square meter. as a result, thousands of SME queued up one day in advance to buy shops, 4000-5000 shops sold out in one day, and Ganzhou sold more than 8000 shops.

Judging from the projects delivered by the company, the opening rate of Ningxiang reached 92.5% and that of Jining reached 89%. Usually 50% of the opening rate is considered a pass.

6. Revenue and profit forecasts for 2014:

Target contract sales of 85-9.5 billion, internal targets of 95-11.5 billion, revenue of 65-7.5 billion, cash income of 80-8.5 billion, profit of 2 billion.

7. Capital expenditure and financing arrangements:

The company has a total debt of 800 million and cash on hand of 3.5 billion. In 2014, the expenditure on land acquisition was 1 billion (more than 300,000 square meters * 300 yuan / square meter), and the cost of construction and security was 2 billion (2500-3000 yuan / square meter * 1 million).

The cash flow of the company is so abundant that there is no need to mention the 1.6 billion credit granted by the bank. There is no need for financing in the short term.

8. The strategy of developing e-commerce:

The company's main business is still selling houses, and the e-commerce business will find a front-line partner. The main businesses expected to develop are warehousing, network finance, micro-loans and so on. The company has a large number of SME data and information, which will be changed from offline to online in the future to become a SME information platform.

9. The orientation and relationship with South China City:

The relationship between the management of the company and South China City has always been very good. South China City is relatively high-end in first-tier cities. The company is mainly in third-and fourth-tier cities. There are 280 prefecture-level cities and 373 county-level cities throughout the country. The company adds 3-4 projects every year. At present, there are 20 projects under discussion, which usually take 1-2 years to talk about. Therefore, even if South China City is laid out in third-and fourth-tier cities, the market capacity is large enough and there will not be much competition.

10. Our suggestions:

In terms of profitability, 2-3 years' performance growth, and financial structure, the company's current valuation is relatively cheap and safe (PE 5x, PB 1.4x). We are optimistic about the company's professional sales strategy and team, as well as the business strategy to maintain reasonable profits.

We believe that the core is the continuity of the success of the business model, from the company's opening of several projects, the results are good. However, considering that in the future, the company is persuading the old SME demolition in other cities not to rule out the possibility of challenges, and whether the new urban areas of third-and fourth-tier cities are popular enough due to the economic downturn, it remains to be seen whether businesses can continue to move in later.