Key points of investment:
Incident: The company announced that its wholly-owned subsidiary competes for land use rights.
Land was sold in Tonglu, and the sports town actually settled. The company successfully competed for plots 1 and 2 south of Gaojia Road in Tonglu County. Among them, plot 1 is sports land, covering an area of about 80,600 square meters, a floor area ratio of 0.3 to 0.5, 50 years of property rights, and a total transaction price of 36.4 million yuan. Lot 2 is mixed commercial and residential land, covering an area of about 91,800 square meters, with a total transaction price of 156 million yuan. The company signed a strategic cooperation agreement with the Tonglu Municipal Government on March 8, 2017. This time, it won the Tonglu plot. The main purpose was the construction of the Tonglu International Soccer Town project, which also meant that the company's first sports town was settled. The total investment of the project is planned to be RMB 2 billion, including the construction of “one stadium at a time”, that is, the construction of a large-scale stadium, comprehensive stadium and integrated training base. After the stadium is completed, the company will use the stadium as a transfer base for Zhejiang Rheinda Women's Football Club, Zhejiang Women's Hockey Team, and Zhejiang Women's Curling Team, and the venue for provincial, national, international soccer, ice hockey and curling events. The project site has both commercial, residential, and sports attributes. The company plans to develop integrated operation and management through government procurement services and market-based operation in the future to create a sports town with snow and ice sports bases and international soccer bases, which is a reflection of the company's active implementation of the “416 Strategy” of the sports industry.
Actively promote the development of sports towns around the “space+content” business model. By the end of 2016, the company had set up and operated 10 stadiums, including 1 large complex (Rhine Stadium Beijing Daxing Store - Kunlun Battle World Fight Center) and 9 Lander Club fitness clubs (Huanglong Branch, Wensan Branch, Xihu Store, Xinchang Branch, Shengyuan Branch, Jiangnan Store, Fuyuan Store, Runyuan Store, Junyuan Store). Since 2017, the company has accelerated the construction of a six-tier stadium system, signed contracts for 3 sports towns in Tonglu, Xiaoshan and Yiwu. At the same time, many sports complexes have been signed and settled in Jiaxing, Nanjing, Hangzhou, Chongqing and other places.
Investment advice: No ratings yet. The company's earnings per share in 2017 and 2018 are expected to be 0.02 and 0.03 yuan respectively. The company's closing price on September 15, 2017 was 7.04 yuan per share, corresponding to PE 352.00 times in 2017 and 243.67 times PE in 2018. The company's personnel, capital, and business are in place, and the strategic layout is becoming more and more clear. It closely revolves around the three major IPs (soccer, basketball, ice and snow) +sports town, and lays out upstream and downstream of the industrial chain to achieve the implementation of sports IP. We are optimistic about the company's medium- to long-term development trends and the company's leading position in the sports industry. Since the acquisition of the Southampton team (the major asset restructuring plan announced by the company to be suspended on April 14) is critical to the company's soccer IP and the soccer town project surrounding the soccer IP, and has a significant effect on improving the company's profits; considering that the team in the original plan has been acquired by Gao Jisheng, the actual controller of the company, we anticipate that there is still a possibility that the company will restart and implement major asset restructuring involving the team in the future. Since there is great uncertainty about the acquisition of soccer teams and uncertainty about profits, there will be no ratings for the time being.
Risk warning: Sports town's progress fell short of expectations.