Lingnan Co. (002717): Expansion and expansion of cultural tourism start-up spin-off listing is worth looking forward to

Lingnan Co. (002717): Expansion and expansion of cultural tourism start-up spin-off listing is worth looking forward to

Endogenous and extended two-wheel drive, and the business structure is continuously optimized.

At the beginning of the listing, the company was mainly engaged in landscaping business. Since 2015, the company has carried out “second entrepreneurship” and vigorously laid out cultural tourism and water management business sectors through extension expansion. It has successively acquired Henrun Technology, Demag, Xingang YonghaoAnd other companies, the company gorgeous transformation of ecological environment, garden 杭州夜生活网 construction and cultural tourism investment and operation integrated service providers.

At present, the company has first-class qualifications for general contracting for water conservancy and hydropower construction, first-class qualifications for national landscape architecture design, first-class qualifications for general contracting for municipal public works, and other qualifications. It has established three major business sectors: ecological gardening, water governance and cultural tourism.Among them, water governance and cultural tourism business grew rapidly. In 2018, the operating revenue of water governance business increased by 280%, and that of cultural tourism business increased by 56%.

The company’s business structure continued to be optimized, and the proportion of profits in cultural travel business continued to increase.

In 2018, the three major businesses of the company’s ecological garden, water governance and cultural tourism accounted for 49%, 39%, and 16% of the operating income, and the gross profit accounted for 41%, 32%, and 27% respectively. The cultural travel business contributed to the company’s performance.Significant increase in contributions.

The garden industry ushered in pain and adjusted its development strategy.

The biggest “pain point” in the garden industry is the advancement of funds. The advancement of funds causes high receivables, inventory and long-term receivables of garden companies, and the operating cash flow continues to deteriorate.

In order to maintain the company’s continuous growth, the garden company must meet the development needs through continuous financing.

Since 2017, the state has introduced a series of financial deleveraging policies. The garden industry cannot rely on the financing growth model to sustain, and the pressure on cash flow is increasing day by day.

At the same time, the state has promulgated the rectification policies of PPPs such as “Circular 50”, “Circular 87” and “Circular 92”. Irregular PPP projects were forced out of the warehouse, bringing potential risks to the development of the industry.

From 2018 to 2019, the performance of the garden industry was “squat”. Too many companies’ performance fell sharply or worsened, and the company could not be spared.

The company adjusts its development strategy to take the initiative to carry out engineering business advancement and order acceptance, while increasing cash flow management, preventing and controlling operational risks and cash flow risks, reducing the pledge rate of major shareholders, and enhancing shareholders’ ability to resist risks.

At present, the company’s financing environment has improved, and new growth has resumed. It is expected to stop falling and stabilize first, leading the industry out of the trough.

The cultural travel business set off strongly, and the core companies performed well.

Since 2015, the company revolves around the established strategy of “Second Entrepreneurship” and has successively acquired equity in Henrun Technology, Demagee, Micro-Communications and other companies through mergers, acquisitions and restructuring, and has continued to increase the cultural tourism business sector.

Hengrun Technology is a leading domestic theme cultural tourism creation service operator, focusing on the research and development, design, production and system integration of immersive amusement equipment systems, and achieved operating income in 20187.

350,000 yuan, net profit1.

4 billion.

Demag is a global brand creative marketing professional operation service provider. It is mainly responsible for global conference and exhibition marketing services, global brand operation activities, and design and construction of exhibition hall space. In 2018, it achieved a net profit of 0.

4.6 billion.

Weibo is a high-quality Internet marketing platform dedicated to providing customers with social network and new media integrated marketing service solutions, and achieved operating income in 20184.

20,000 yuan, net profit 1.

08 thousand yuan.

The company’s cultural travel business set off strongly, the core company’s performance was beautiful, and the total revenue contributed by the company’s cultural travel segment in 2018 was total.

9.5 billion, gross profit 5.

910,000 yuan, net equity profit 2.

04 billion.

The curtain of the spin-off of the company has been opened, and the company already has the spin-off conditions.

In March 2019, the CSRC issued the “Measures for the Continuous Supervision of Listed Companies on the Science and Technology Innovation Board (Trial)”, which clearly states that listed companies that have reached a certain size can spin off their businesses independently according to relevant regulations, and qualified subsidiaries are listed on the Science and Technology Innovation Board.
In August 2019, the Securities Regulatory Commission issued a consultation draft of “Some Provisions on the Pilot Pilots for the Subsidiary of Subsidiary Subsidiaries of Listed Companies”. For the first time, detailed definitions of the definitions of spin-offs, listing information, and requirements were made.

In December 2019, the China Securities Regulatory Commission issued the “Some Regulations on the Pilot Pilots of Spin-off Subsidiaries of Listed Companies”. The profit threshold for spin-off listing requires a re-allocation of US $ 600 million. The spin-off and listing can be the entire A-share market.Landing.
According to the spin-off listing policy, a listed company that intends to spin-off must carry out the following activities: (1) three years of domestic listing; (2) continuous profit in the last three fiscal years, and the net profit attributable to the parent shall not increase by more than 600 million yuan;(3) The net profit of the subsidiary to be split does not exceed 50%, and the net assets do not exceed 30%.

The company basically meets the requirements for spin-off and listing, and its subsidiary, Henrun Technology, has completed the share reform.

Profit forecast and investment suggestions: It is estimated that the company’s net profit attributable to shareholders of the parent company in 2019-2021 will be 4 respectively.

2.8 billion, 4.

9.3 billion and 5.

91 ‰, an annual increase of -45%, 15% and 20%; EPS is 0.

28 yuan, 0.32 yuan and 0.

38 yuan, corresponding to the closing price of PE on February 20, 2020 were 20.

43 times, 17.

76 times and 14.

80 times, PB is 1.

6 times, 1.

5 times and 1.

4 times.

Since the “second start-up”, the company’s business structure has continued to be optimized, and the company has transformed from an “urban landscape operator” to an “ecological garden, water governance and cultural tourism integrated service provider.

The company achieved diversification of tasks through endogenous growth and extension, strengthened its core competitiveness, enhanced its ability to resist risks, changed the speed of new breakthroughs in water governance and cultural tourism, and bottomed out, and led the garden industry outTrough.
At the same time, the company has a total of spin-off listing conditions, and is expected to share the dividends of the spin-off policy.

We are optimistic that the company’s performance has bottomed out and the cultural tourism sector has upgraded its evaluation of the company. We maintain the company’s “Buy-A” rating with a target price of 7 yuan, corresponding to about 21 in 2020.

8 times PE.

厦门夜网 Risk warning: changes in PPP policy, project advancement is less than expected, orders are less than expected, performance continues to deteriorate, and spin-off and listing are blocked.

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