Investment income contributes to major profits, operating profits reverse losses, and 4Q recovery slows month-on-month.
According to the annual report of the China Reserve Corporation in 2017, the operating income in 2017 increased by 67.6% over the same period last year to 25.6 billion yuan, and the net profit increased by 74.3% to 1.34 billion yuan compared with the same period last year. The net profit was reversed from a loss of 27 million yuan to a profit of 53 million yuan over the same period last year. The increase in net profit mainly comes from the investment income brought by the equity exchange with the parent company, which increases the pre-tax profit by 1.46 billion yuan. The net profit after deducting non-return for the whole year is subsidized because there is no car carrier, the business scale of the supply chain expands and the prices of the main varieties rise to turn losses into profits. In the fourth quarter, the company's operating income increased by 13.8% compared with the same period last year, down 5.8% from the previous year, but due to the rise in the cost of sales, the quarterly gross profit lost 270 million yuan, and the net profit after deducting non-profit was 87 million yuan, and the recovery trend slowed down. Maintain the target price of 10.0-11.0 yuan and the "overweight" rating.
The rapid development of car-free transportation has become a leader in the industry, driving the recovery of business.
In 2017, the company's main business income increased by 10.26 billion yuan, of which the distribution and transportation business / commodity circulation business contributed 42.3 billion yuan of revenue increment respectively, which is the main driving force of the company's revenue growth. We believe that with the effective use of its leading advantages in the commodity supply chain and warehousing industry, the company can quickly accumulate the basic supply and capacity needed for "car-free transportation" to form a larger capacity trading volume and higher trading activity. According to the company's annual report, in the monitoring of the pilot operation of the car-free carrier of the Ministry of Communications, its distribution (that is, "car-free carrier") business subsidiary ranks first in the industry in terms of freight volume and capacity integration, and the waybill volume ranks second. With industry leading edge. In addition, the company's supply chain business is affected by the increase in volume and prices of commodities such as iron and steel, resulting in rapid revenue growth.
Government subsidy helps the main business to reverse its losses.
As the first batch of pilot enterprises of the Ministry of Transport for "car-free transportation" (delivery letter No. 2017), the company received a government subsidy of 650 million yuan for "car-free transportation business subsidy" this year, which was included in the subject of "other income" and included in the profit and loss of the current period. because it is considered as a "government subsidy that is closely related to the company's normal business, in line with national policy and in accordance with a certain standard quota or quantity". As recurrent profit or loss. Therefore, although the company's 2017 gross profit margin fell 2.8% to 2.1%, gross profit decreased 28.3% to 540 million yuan compared with the same period last year, and business tax and additional and period expenses increased by 51.9% to 1.09 billion yuan, the company's net profit after deducting non-return is still a profit of 53 million yuan.
High quality warehousing resources need to be explored, and the reform of state-owned enterprises may be expected.
Chengtong Group, the major shareholder of the company, is China's state-owned capital management platform, with few obstacles to capital operation, and the future reform of state-owned enterprises may be expected. The second shareholder GLP is the leader of domestic logistics real estate, considering that as a leading domestic warehousing enterprise, China Storage is rich in warehousing, land and transportation resources, and there is more room for tapping potential in the future, if the management system and decision-making mechanism are improved, enterprise value will be fully explored.
Maintain target price and rating
As the company has issued a pre-increase announcement (No. 2018-004) on January 30, 2018, after this update of detailed financial data, we expect the results for 2018-2020 to be 9.87 shock 10.11 / 1.029 billion yuan ($955 million before 2018-2019). Due to the low correlation between the company's valuation and operating performance, but directly related to how the land value is reflected, we maintain the 10.0-11.0 yuan bid price and the "overweight" rating in the absence of management changes.
Risk hint: falling commodity prices lead to a reduction in income and a reduction in profit margins.