Main points of investment
Event: the company released its annual report that its operating income in 2017 was 14.39 billion yuan, an increase of 47% over the same period last year; the net profit was 260 million yuan, an increase of 8% over the same period last year; and the net profit after deducting non-recurrent income was 110 million yuan, an increase of 131% over the same period last year. The impact of non-recurring profits and losses on profits decreased significantly compared with the previous year; the gross profit margin of main income was 30.4%, up 7.9 percentage points from 22.5% in 2016. The company's basic earnings per share is 0.16 yuan. It is proposed to pay a cash dividend of 0.5 yuan for every 10 shares in 2017.
The deep ploughing of Yunnan has achieved remarkable results, moving towards the key areas of the country. In 2017, the company's main business income rose 48% from the previous year to 14.1 billion yuan, accounting for 98% of the total revenue, mainly due to the recovery of the commercial housing sales market. In the past, Yunnan Chengtou was mainly distributed in Kunming and other regions of Yunnan Province, but now the layout of the company's urban development plate has moved towards the whole country, including hot cities such as Beijing, Shenzhen, Xi'an, Chengdu and so on. In 2018, the company plans to achieve an income of 16 billion yuan and a planned investment of 18 billion yuan.
The scale of assets has increased substantially, and the industrial chain has been actively expanded. The company's total assets in 2017 were 78.8 billion yuan, up 23 percent from 64.1 billion yuan in 2016, compared with 45.2 billion yuan in 2015. While the company's assets have expanded significantly, the asset-liability ratio has dropped slightly to 88.82% from 89.22% in 2016, and the asset-liability ratio is still on the high side. In 2017, the company added 8 new Yintai project companies through major asset restructuring, with a large increase in asset scale and operating income. The company combines the advantages of great health and leisure resources to the transformation of health, culture, travel and exhibition industry, and combines the company's existing product line to form three major product models: traditional real estate development plate, Kangyang culture and tourism industry plate and future city plate.
Gross profit margin rose significantly, Yunnan housing market warmed up. The gross profit margin of the company's main income in 2017 was 30.4%, up 7.9 percentage points from the previous year. This is mainly because the gross profit margins of real estate, property services and hotel operations have all increased significantly compared with the previous year. In 2017, real estate development investment and new construction area in Yunnan Province both increased, and commercial housing sales and sales picked up. In 2017, the real estate market in the province was relatively good, showing a situation of rising volume and price.
Profit forecast and rating. It is estimated that the EPS from 2018 to 2020 is 0.23,0.31,0.38 yuan respectively, and the corresponding PE is 20 times, 15 times and 12 times respectively. Considering that the company, as an important real estate listing platform under the state-owned assets of Yunnan Province, has significant resource advantages and obvious space for the expansion of the industrial chain, the company is given a valuation of 23 times in 2018, corresponding to the target price of 5.29 yuan, covering for the first time and given a "overweight" rating.
Risk hints: stringent regulation and control policies, investment or less than expected, high asset-liability ratio, debt repayment pressure or greater, expansion of business scale or operational risk.
