Core viewpoints
In the first half of 17 years, the company's revenue and net profit fell by 37.7% and 33.33% respectively compared with the same period last year. Net profit after deducting non-profit decreased by 18.99%, of which revenue in the second quarter decreased by 35.52% compared with the same period last year, and net profit increased by 26.03% compared with the same period last year. The decrease of project income and investment income in the real estate sector are the main reasons for the significant decline in revenue and profit in the first half of the year.
Benefiting from the recovery in domestic middle and high-end consumption, the company's clothing sector revenue and net profit in the first half of 17 years increased by 10.67% and 12.96% respectively compared with the same period last year, of which brand clothing business revenue increased by 13.62%, sales outlets decreased by 85, business area increased by 2.3% compared with the beginning of the year, the book value of inventory goods decreased by 16.72%, and online income increased by 39.24%. Considering a series of changes in the organizational structure, channels and membership system of the company's clothing business since the beginning of 16 years, we expect the improvement of the company's brand clothing business to run through the whole year.
Due to the cyclical factors of project development, the revenue and net profit of the company's real estate sector in the first half of 17 years decreased by 54.24% and 60.97% respectively compared with the same period last year, and the pre-sale area and amount of the company's real estate increased by 21.03% and 78.75% respectively at the end of half a year. The continuous increase of land reserve since 16 years (3 new land reserves in 16 years and the establishment of Shanghai Real Estate Development Company in 17 years to find high-quality projects and new directions) has strengthened the stamina for the follow-up development of the company's real estate business.
On the other hand, combining the idea of "industrial investment transformation" with Youngor's own resource advantages, it is expected that in the future, the company's real estate business will probably focus more on the cross-market segments of modern service industries and real estate development, such as health industry, health care and pension, tourism and vacation, culture and entertainment, and so on.
In the first half of 17 years, the investment income of the company's investment business decreased by 21% compared with the same period last year, and the net profit decreased by 17.68% compared with the same period last year. The revaluation value of the equity held by the company's investment sector is huge. according to the semi-annual report, the company holds 11.64% of Ningbo Bank and 0.74% of Pudong Development Bank, corresponding to a market capitalization of 12.3 billion. If you consider the company's 5% stake in CITIC Limited, the total market capitalization has reached 26.9 billion yuan. We believe that the continued rise in bank stocks this year and the recovery of the Hong Kong market are expected to bring more room for potential market capitalization revaluation for the company's investment sector.
The increase of controlling shareholders, financial and industrial capital reflects the recognition of the value of the company from the side. From March to April in 16 years, the controlling shareholders increased their holdings by a total of 40.48 million shares, taking into account the average cash dividend price of 9.66 yuan per share. Yao Jianhua and Zhu Chongyi and their partners raised their cards in March 16. All these reflect the confidence of major shareholders in the company's continued growth and strength in the future and the recognition of the value of the company by industrial capital. In retrospect, stock prices tend to perform well during periods when financial and real estate stocks outperform the market significantly (2007 and 2015), and the current low valuation and annual dividend yield of about 4% are expected to enhance the attractiveness of the company's stock price.
Financial forecasts and investment suggestions
We maintain the profit forecast of the company for 2017-2019, with reference to the average valuation of the comparable company in men's wear and real estate sectors, and maintain the company's clothing and real estate business 27 times and 10 times PE for 17 years, while the investment business only considers the 12.3 billion yuan of Ningbo Bank and Pudong Development Bank, with a total valuation of 43 billion yuan, corresponding to the target price of 12.01 yuan, maintaining the company's "overweight" rating.
Risk tips: the impact of financial market adjustment on the investment sector, clothing retail and real estate continued to be lower than expected.