Event: on June 29, Xi'an Diet announced that Xi'an Tourism Group, the company's controlling shareholder, had signed a share transfer agreement with overseas Chinese Town Group. West Travel Group plans to transfer its 74.8584 million shares (15.00% of the total company shares) to overseas Chinese Town Group. The Western Travel Group agrees to authorize the transferee to exercise the voting, proposal and shareholders' meeting rights of 30.1416 million shares (6.04% of the total company shares) held by the company.
With the change of the actual controller, the entry of the overseas Chinese Town brings new changes. After the completion of the transfer agreement, overseas Chinese Town Group will have a total of 105 million shares of the company's corresponding voting rights, accounting for 21.04% of the company's total share capital, and the actual controller of the company will be transformed from Xi'an SASAC to SASAC of the State Council. After the change in the company's ownership structure, overseas Chinese Town is expected to send people to the board of directors to participate in the operation and management of the company. Overseas Chinese Town, as a large central enterprise, has advanced business philosophy, the future operation of the company will be more market-oriented, and the management mechanism is expected to be improved. The follow-up reform of state-owned enterprises is expected to be enhanced. At the same time, overseas Chinese Town, as the leader of the domestic cultural tourism industry, has rich cultural tourism resources and strong financial strength. In the process of cooperation with overseas Chinese Town, Xi'an Food is expected to combine the company's influential catering brands with the high-quality tourism resources of overseas Chinese Town, so as to enhance the strength of the company's main business; and with its strong financial strength to build O2O online platform and train, deepen the tourism industry, and expand diversification.
The focus of "Belt and Road Initiative" tourism is Xi'an, and the layout of cultural brigades in overseas Chinese towns is gradually taking shape. In our exclusive "Belt and Road Initiative" special report released at the beginning of the year, it was pointed out that "Belt and Road Initiative" was the biggest theme investment opportunity in 2017. The tourism industry focused on Xi'an, and suggested that we should focus on the three local catering and tourism enterprises in Xi'an, including Xi'an Food. This time, overseas Chinese Town Group has invested 238 billion yuan in Xi'an, with the goal of creating a new highland for literature and tourism, and implemented a series of major projects called "1-7". After successively entering Qujiang Culture and Culture Brigade and Xi'an Diet, the layout of Xi'an Culture and Tourism has gradually taken shape. "Belt and Road Initiative" has brought great opportunities for the development of Xi'an tourism. At the same time, driven by the strong brand effect and financial strength of overseas Chinese Town, Xi'an tourism will usher in great development, and there will be a significant increase in passenger flow in the future. Xi'an food will benefit from this, and its performance is expected to be greatly improved.
Investment rating and valuation: it is estimated that the company's EPS will be 0.05,0.06 and 0.11 yuan respectively from 2017 to 2019. Cover for the first time and give a "recommended" rating.
Risk hint: the market competition in the catering industry has intensified, and the progress of the reform has fallen short of expectations.