Report summary:
Yuancheng Co., Ltd. released its annual report for 2021, achieving operating income of 573 million yuan, a decrease of 19.84% over the previous year, net profit of 49 million yuan, a decrease of 47.31% over the previous year, after deducting net profit of 34 million yuan from non-return mother, a decrease of 49.83% over the previous year.
Comment:
The epidemic affected the progress of the project, and the company's performance was clearly under pressure. The company's revenue fell by -19.84% in 2021. The main reason for this is that under the influence of the epidemic, Party A's fund-raising for construction was limited, and some project site demolition and transfer problems occurred, which led to slow construction progress; the company's careful undertaking of the project also caused revenue to drop. The company's 2021 performance decreased by 47.31%, which was greater than revenue. The main reason for this was: gross margin decreased by 2.27pct to 26.96%; the expense ratio for the period increased by 6.05pct to 19.52%.
Remittance efforts have been strengthened, and the cash flow performance has been impressive. In 2021, the company stepped up efforts to collect project payments and recover arrears from old projects in the early stages. As a result, the company's annual net operating cash inflow reached 241 million yuan, a sharp increase of 215 million yuan over the previous year. The receivables and payout ratios increased 77.44 pct and 43.9 pct respectively to 149.74% and 124.15%, respectively.
In-hand orders are plentiful to guarantee future performance recovery. At the end of 2021, the total amount of orders placed by the company was 1.68 billion yuan. Of these, contracts have been signed but not yet started, amounting to 130 million yuan, and the unfinished portion of the projects under construction amounts to 1.55 billion yuan. Overall, the company has sufficient order reserves, and as the impact of the epidemic decreases, its core business is expected to recover.
With steady growth, infrastructure investment is expected to be moderately advanced, and surrounding travel is expected to replace outbound travel under the pandemic. This year's report on the work of the government proposed a 5.5% economic growth target. The government's investment in infrastructure construction may increase moderately ahead of schedule. On the one hand, it can guarantee the company's history and the cash flow of future business repayments, and on the other hand, it will bring more market opportunities. At the same time, due to the impact of the epidemic, outbound trips and long-distance trips have been discouraged, but demand for leisure and vacation surrounding tours is strong. The construction project of Zhejiang Yuelongshan Tourism and Vacation Co., Ltd., a holding subsidiary of the company, plans to gradually open trial operation. The company's revenue structure is expected to improve in the future, and performance growth capacity is expected to improve.
The first coverage gave the company a rating to increase its holdings, with a target price of 7 yuan. The company's EPS for 2022-2024 is expected to be 0.28/0.38/0.50 yuan.
Risk warning: the risk of repayment of accounts receivable and the risk that the future operation of the subject matter of the merger falls short of expectations
