Events:
The company issued a semi-annual performance forecast, with operating income of 3.913 billion yuan during the reporting period, an increase of 373.03% over the same period last year, and a net profit of 28.52 million yuan, an increase of 42.19% over the same period last year. The net profit after deducting non-return reached 21.53 million yuan, an increase of 29.19% over the same period last year.
Comments:
The performance of the acquisition of subsidiaries has greatly increased, with the largest profit from the civil construction business. Mainly affected by the acquisition of subsidiaries, the company's revenue during the reporting period increased by 373.03% compared with the same period last year. In terms of business, the acquisition gave the greatest impetus to the growth of the company's civil construction business, with civil construction revenue reaching 2.237 billion yuan during the reporting period, an increase of 1233.38% over the same period last year. The operating income of residential fine decoration was 942 million yuan, an increase of 333.51% over the same period last year, and the business income of public building decoration business reached 677 million yuan, an increase of 57.34% over the same period last year.
The profitability is weakened and the management efficiency is improved. The company's gross profit margin for sales in the first half of 2021 was 7.28%, a year-on-year decrease in 6.81pct. The decrease in gross profit of the company is mainly due to a significant increase in the share of revenue from civil construction, which is much lower than that of other businesses. Judging from the three rates, during the reporting period, the sales expense rate / management expense rate / financial expense rate was 0.49% / 1.99% / 1.84% respectively, which was changed from the same period last year-0.96pct/-3.17pct/+0.81pct. The overall improvement of the three fees compared with the previous year marks the improvement of the management efficiency of the company in the current period.
The acquisition synergy has been reflected, and the ability to obtain orders has been significantly improved. The company accepted the purchase of 50% stake in Huafa Jinglong held by Huafa shares and 40% equity stake in Jiantai Construction held by Huawei Investment. at present, nearly 10 bid-winning projects have been announced, with a large number of orders of 100 million yuan. among them, Huafa Jinglong and Jiantai Construction bid related party projects are in the majority. For example, the general contract for the construction of the scientific research comprehensive building project in the North second District of Zhuhai people's Hospital, the general contract project for the construction of Huafa Future Diaicui Park, and the S1 residential project for the life center of Fushan Industrial Park. This acquisition broadens the company's business scope and enhances the company's ability to undertake projects with remarkable synergy.
With the improvement of the macro environment of the industry, the company still has a lot of room for development. During the reporting period, China's economy recovered steadily and investment in infrastructure and real estate development increased steadily. With the upgrading of residents' consumption structure and the impact of COVID-19 's epidemic situation, the industry concentration is expected to further increase. As one of the top 100 enterprises in the architectural decoration industry, the company's market share is expected to further increase.
Give the company an "overweight" rating. Due to the adjustment of the profit forecast of the merger and acquisition statement, the company's EPS in 2021-2023 is expected to be 0.34max 0.45max 0.55 yuan, corresponding to PE 29.41max 22.23max 18.39 times.
Risk hint: the landing of the order is not as expected, and the valuation and profit forecast are not as expected.