Main points of investment
Profits increased sharply in the third quarter, and cash flow improved significantly compared with the same period last year.
In terms of profits: Dacai shares achieved an operating income of 1.025 billion yuan in the third quarter, a net profit of 37.06 million yuan, a year-on-year increase of 47.4% in the third quarter, and a higher-than-expected growth in single-quarter performance. In addition, we analyze that Q4 company will speed up work, and profit performance is expected to continue to improve.
In terms of cash flow: the company's cash flow continued to improve in the first three quarters, with a net operating cash flow of 349 million yuan, an improvement of 399 million yuan over the same period last year. Our analysis is mainly due to the fact that the company regards accounts receivable management as a phased key core work and continues to accelerate the return of funds. In terms of operating rebates, the company's Q3 single-quarter cash-to-cash ratio is 138%, which is significantly higher than that of H1 by 35pct.
The new signing is 70% higher than the same period last year, the orders on hand are abundant, the orders for the new track continue to increase, and the growth logic is gradually realized.
In the first three quarters, the company signed a total of 7.767 billion yuan, a year-on-year increase of 70%, the growth rate is among the highest in the plate. Among them, decoration / housing construction / municipal engineering / design have respectively achieved a cumulative total of 26x31 shock contracts of RMB 0.82 million, compared with the same period last year, respectively-14%, "296%," 266, and 40%. 22H1 has an order of 8.5 billion yuan on hand, with sufficient momentum for growth. At the same time, the company's Q1-3 new business orders for the renovation of old residential areas, historic buildings, municipal infrastructure and other new business orders reached RMB 5.8 million, respectively, with an increase of 30%, 2580%, 231%, and a total increase of 195%, accounting for about 38% of the total orders, a significant increase of 16 pct compared with the same period last year. The logic of growth has begun to materialize, and the momentum of new business is strong.
High-growth enterprises in the construction industry chain with high future growth / safety and strong performance certainty refer to the in-depth report of "four questions and answers on moral and talented shares" issued by Zhejiang Construction Group on October 27, 2022, the company has three alpha advantages:
1) qualification advantage: the company is the only fully qualified company in the industry with architectural design + construction, decorative design + construction and new material production, with a total of 27 Class A (Class I) qualifications covering the whole construction industry chain. The layout of the whole industry chain and complete qualifications will help the company to transform and develop new urban construction, new infrastructure and other business areas, and continue to enhance the ability and opportunities to obtain orders.
2) Business advantages: less affected by the real estate industry, the company's cornerstone business is mainly public construction, and the main customers include government agencies, public facilities development enterprises, and so on. At the same time, the company develops EPC business. By the first half of 2022, the company's EPC general contracting income has increased by + 166% compared with the same period last year, and the company's ability to undertake high-end business continues to strengthen.
3) growth advantages: the company focuses on the layout of three new business areas: first, the transformation of old residential areas, Shandong Province contains 200 billion space during the 14th five-year Plan, the company has obvious advantages in first-mover layout, and the market share is expected to continue to increase; second, historical buildings are renovated, the competition pattern of the track is clear, the business threshold is high, and the profit margin is higher than the traditional construction business, which is expected to improve the company's overall gross profit margin. Third, high-end system doors and windows manufacturing 14-five stock room hardcover market more than CAGR+20%, the company's high-performance door and window production line will be put into production within a year, which is expected to drive revenue-side deterministic increments. On the whole, the company's three new engines have a broad market space, which is expected to open up a new profit growth space for the company, with high performance and strong certainty.
Profit forecast and valuation
We estimate that the company's net profit from 2022 to 2024 will be 153 million yuan, 214 million yuan and 290 million yuan, an increase of 9.25%, 40.26% and 35.45% over the same period last year, corresponding to 14.90,10.62,7.84 times of PE respectively. We conservatively estimate the company's compound growth rate of 38% in 2022-2024. Based on the PEG valuation perspective, the company's current corresponding PEG is only 0.39, the valuation level is in the undervalued range, maintaining the "buy" rating.
Risk hint
The execution of on-hand orders is not as expected, the development of new business is not as expected, the risk of future assets and credit impairment is higher, and the asset-liability ratio is higher.