Haining Leather City: Actively Promoting The Transformation Of Innovative Business

Recently, the company announced a performance Bulletin: in 14, the company achieved operating income of 2 billion 439 million yuan, down 16.81% from the same period last year, operating profit of 1 billion 205 million yuan, down 9.69% from the same period last year, and net profit attributable to 936 million yuan, down 9.87% from the same period last year, which is equivalent to 0.84 yuan per share, which is lower than our expectation. Among them, the 4 quarter achieved operating income of 535 million yuan, down 24.31% compared with the same period last year, operating profit 157 million yuan, down 38.12% compared with the same period last year, the net profit attributable to 146 million yuan, down 41.52% compared with the same period last year, equivalent to 0.13 yuan per share.

The company's revenue decline is the main reason for the decline in net profit: in the 14 year's main business income, the sales revenue of shops and supporting property is only 220 million yuan (sales income of Fashion Industrial Park), which is 711 million yuan over the same period of 13 years (Chengdu). Haining Leather City The sales revenue of the first phase shops and the sales of the three phase of the brand and the sales of the central part of the Department decreased by 68.80%; the sales revenue of the residential development came from the late sale of the Oriental Art villa, and the income dropped by 88.61% compared with the same period last year. While the rental and management income of the property increased from 13 to 13 (from the 14 year's newly opened Harbin and Tong Er Bao three market), the growth rate dropped from 61.12% in the same period last year to 11.94%.

Steady development Main business 15 year performance elasticity is greater: the new market in Harbin in the second half of the 14 year and the three phase market in Tong Er Bao will contribute to the annual income in 15 years, bringing the growth of the rental income of the shops and the confirmation of some sales revenue. It is estimated that in the second half of 15, the company will open new Urumqi, Ji'nan and six Korean fashion center projects in the second half of the year, thus the new rental and sale area will increase significantly. In addition, the company has follow-up projects such as Zhengzhou, Tianjin and Beijing. We believe that the company will focus on the way of combining light assets (output brand and management operation market) with heavy assets in the main business in the future. At present, the Urumqi project that is expected to be launched during the year is light asset operation.

Focus on new business and develop new profit growth points: 1) Online finance 。 The company invested in the establishment of Haining China Leather City Internet Nationwide Financial Services Inc, accounting for 40% of shares, the largest shareholder. The company's entity network, business and consumer groups create good objective conditions for Internet financial company's product mining and user development. 2) Korea city (Korea Fashion Center). Through the introduction of Korean goods, to ensure the supply of goods, expand the category, attract more consumers, solve the problem of the thin and busy season of leather market. The Korean market is expected to open in October. Subsequent promotion and chain performance still need performance test. 3) Korean cross-border commodity business. The company signed a cooperation agreement with South Korea about the reason. It cooperated to build a cross border e-commerce platform for Korean goods, and to cooperate with B2C (O2O) in China. The cooperation period is 3 years. In the future, the two sides intend to set up a joint venture to cooperate. The business is also an effective complement to the Korean city project launched by the company during the year. The cross-border e-commerce platform will be put into operation this autumn and is expected to have no significant impact on the company's performance in the short term.

Earnings forecast: the company is a leading market in the domestic leather specialty market, and has many reserves. While expanding and expanding in an orderly way, the company actively promotes innovative business and strives to upgrade and transform its format. The company has implemented equity incentive, management has the power to improve management performance and boost stock prices. Our Forecast Ltd 15-16 years EPS is 1.02 yuan, 1.25 yuan, corresponding to PE is 17.1 times, 13.9 times, maintain "overweight" rating, we believe that with the company's innovation business, the company's performance improvement, at the same time, the valuation is also expected to be improved, it is suggested that investors pay close attention to.