Main points of investment
Event: the company released its annual report for 2021, with an operating income of 2.71 billion yuan in 2021, an increase of 15.9% over the same period last year, and a net profit of 480 million yuan belonging to shareholders, an increase of 26.4% EPS1.08 yuan over the same period last year. At the same time, the company released its quarterly report for 2022, with revenue of 430 million yuan in the first quarter, down 17.9% from the same period last year, and net profit belonging to shareholders of 82 million yuan, down 18.1% from the same period last year.
Both revenue and net profit have increased, and the operation is stable. In 2021, the company achieved an annual operating income of 2.71 billion yuan, an increase of 15.9% over the same period last year, and a net profit of 480 million yuan belonging to shareholders, an increase of 26.4% over the same period last year. The growth rate increased significantly by 21.2pp, and the overall business situation was stable. In terms of business, the company's two major business lines, ecological restoration and municipal landscape, achieved revenue of 1.39 billion yuan and 1.3 billion yuan respectively, which was 21.0% compared with the same period last year. Revenue in the first quarter of 2022 was 430 million yuan, down 17.9% from the same period last year, and the net profit attributable to shareholders was 82 million yuan, down 18.1% from the same period last year. Revenue and net profit declined, mainly due to the deterioration of the epidemic in East China at the beginning of 2022, and the company's signing, logistics and project site progress were all affected.
Under the drag of impairment, the performance still achieved a high increase. The company's gross profit margin in 2021 was 29.7%, an increase of 0.7ppm over the same period last year; net profit was 17.7%, an increase of 1.5ppm over the same period last year; and the expense rate during the period was 3.4%, a decrease of 2.8pp over the same period last year. The company's financial expenses for this year-85 million yuan, the same period last year-3 million yuan, mainly due to the confirmation of part of the margin interest, audited investment and financing projects confirmed that the construction period interest and investment return increased more, driving the company's performance growth significantly.
The net operating cash flow of the company decreased by 1882.2% compared with the same period last year, mainly due to the increase in investment in engineering projects this year, as well as the delayed settlement and collection of projects affected by floods and epidemics. The company provides for a credit impairment loss of 160 million, which is mainly due to the persistently high level of accounts receivable and contract assets, which puts pressure on the company's profit growth.
The cash-to-cash ratio and the cash-to-cash ratio are 38.5% and 45.0% respectively, and the ability to recover money still needs to be further strengthened. The company pays a cash dividend of 0.50 yuan for every 10 shares, plus the share buyback this year, and distributes a total dividend of 52 million yuan in cash, accounting for 10.9% of the net profit returned to the mother, and the dividend yield is 1.2%.
There are plenty of orders on hand, and the cross-regional management pattern is basically completed. In 2021, the company and its subsidiaries won 16 new bids with a total amount of 2.88 billion yuan, and signed 16 new project contracts with a total value of 2.35 billion yuan, an increase of 25.0%. The newly signed orders are mainly located in East, Central and Southwest China, and the company's business coverage has increased steadily, which is conducive to the further improvement of market share and brand influence.
CCER restart is imminent, the company may have new business opportunities. On July 16, 2021, the national carbon emissions trading market opened in Shanghai. At present, the country is actively preparing to restart the filing of CCER projects and the issuance of emission reductions. The national CCER market is expected to restart in 2022. Before 2022, eight major industries will gradually be included in the carbon emissions market, when the demand for CCER will reach 350 million to 400 million tons per year. The company laid out earlier in the development of forestry carbon sinks. Dongzhu carbon sinks, a new wholly-owned subsidiary, was established in 2021, with a professional development and operation team, and a "strategic cooperation agreement" was signed with Sichuan Yangtze River Afforestation Bureau and the people's Government of Ninghua County. The agreement stipulates that forestry resources in the relevant areas will be jointly developed in the future. In forestry carbon sequestration plate companies have competitive advantages in technology, resources and capital, and the industrial layout is expected to be further extended.
Profit forecast and investment advice. The company's homing net profit is expected to grow at a compound rate of 23.8% in three years from 2022 to 2024.
Give the company a comparable valuation of PE13 times its 2022 results and a "buy" corresponding to the target price of 17.81yuan.
Rating.
Risk hints: macroeconomic downside risk, forestry carbon sequestration policy landing less than expected risk, infrastructure investment less than expected risk.