标题：Hongtao DecorationGood earnings and valuation education segment still growing
发布日期：2016-03-01 7:11:02
内容： Action Upgrade to BUY. Earnings slightly beat in 2015. With the education business taking shape, future acquisitions areworth following, and the current valuation is attractive. Lift TP by 12% to Rmb13.9, implying 35x 2016e P/E. Reasoning 2015 earnings slightly beat. Hongtao preannounced 2015 revenue of Rmb3.07bn (-10% YoY) and net profit ofRmb330mn (+12% YoY), 7% above the market consensus. Revenue growth in 4Q15 (+51% YoY vs. double digitdecline in previous five quarters) was mainly driven by the accelerated projects. The revenue recovery wasthanks to a low base, consolidation of acquired education business, little impact from residential property, andaccelerating culture projects. Education business taking shape; visible earnings contribution. Revenue and net profit from the acquirededucation business will likely reach Rmb150mn and Rmb30mn in 2015; net profit might reach Rmb70mn in 2016 (20%of total net profit). Continued expansion of education business; watch further acquisitions. Hongtao has received feedback fromthe CSRC for its CB issuance (Rmb1.2bn); the proceeds will also be used to fund professional education business,including the building of an online smart learning platform & education network, a professional education cloudplatform, an R&D center and a teacher training center. It has also clarified its target to grow stronger through M&A. Earnings forecast and valuation Lift earnings forecasts and TP; upgrade rating. We lift our 2015/16e net profit forecast by 6% (+12% YoY)/18%(+20% YoY) to Rmb330mn/Rmb396mn (assuming the 2016 acquisition goes the same as 2015), and put 2017e netprofit at Rmb482mn (+22% YoY). The stock is trading at 24x 2016e & 20x 2017e P/E, toward the lower end of thesector average, with an attractive valuation. Assuming the P/E of decoration and education businesses are 25x and 50xrespectively, the rational market cap would be Rmb12.5bn. Considering the acquisition might beat expectations, thereshould be a valuation premium. Lift TP by 12% to Rmb13.9, implying 35x 2016e P/E. Upgrade to BUY. Risks Earnings from acquired assets disappoint; slower-than-expected expansion of new businesses.
发布日期：2016-03-01 7:11:02
内容： Action Upgrade to BUY. Earnings slightly beat in 2015. With the education business taking shape, future acquisitions areworth following, and the current valuation is attractive. Lift TP by 12% to Rmb13.9, implying 35x 2016e P/E. Reasoning 2015 earnings slightly beat. Hongtao preannounced 2015 revenue of Rmb3.07bn (-10% YoY) and net profit ofRmb330mn (+12% YoY), 7% above the market consensus. Revenue growth in 4Q15 (+51% YoY vs. double digitdecline in previous five quarters) was mainly driven by the accelerated projects. The revenue recovery wasthanks to a low base, consolidation of acquired education business, little impact from residential property, andaccelerating culture projects. Education business taking shape; visible earnings contribution. Revenue and net profit from the acquirededucation business will likely reach Rmb150mn and Rmb30mn in 2015; net profit might reach Rmb70mn in 2016 (20%of total net profit). Continued expansion of education business; watch further acquisitions. Hongtao has received feedback fromthe CSRC for its CB issuance (Rmb1.2bn); the proceeds will also be used to fund professional education business,including the building of an online smart learning platform & education network, a professional education cloudplatform, an R&D center and a teacher training center. It has also clarified its target to grow stronger through M&A. Earnings forecast and valuation Lift earnings forecasts and TP; upgrade rating. We lift our 2015/16e net profit forecast by 6% (+12% YoY)/18%(+20% YoY) to Rmb330mn/Rmb396mn (assuming the 2016 acquisition goes the same as 2015), and put 2017e netprofit at Rmb482mn (+22% YoY). The stock is trading at 24x 2016e & 20x 2017e P/E, toward the lower end of thesector average, with an attractive valuation. Assuming the P/E of decoration and education businesses are 25x and 50xrespectively, the rational market cap would be Rmb12.5bn. Considering the acquisition might beat expectations, thereshould be a valuation premium. Lift TP by 12% to Rmb13.9, implying 35x 2016e P/E. Upgrade to BUY. Risks Earnings from acquired assets disappoint; slower-than-expected expansion of new businesses.
