The company's 2015 revenue was 957 million yuan, an increase of 315.71%, and a net profit of 33 million yuan, an increase of 144.86% and 142.74%. Revenue in the first quarter was 121 million yuan, same as a decrease of 20.72%; net profit loss was 33 million yuan, EPS-0.04.
Main points of investment
In recent years, the company continues to transform the landscape design and construction. The company successfully completed the non-tradable share structure reform in 2013, and two landscape enterprises entered the listed company and identified the landscaping industry as the core industry. At present, the company has a landscape design institute, two garden engineering construction enterprises, and large-scale nursery bases in many places across the country, realizing the rapid development of the whole industry chain. greatly enhance the company's comprehensive competition, market expansion and follow-up development ability.
The reason for the high growth in 2015 is the increase in revenue from landscape construction and gross profit margin. The company's main business is divided into landscape construction, landscape design, seedling sales and gas sales. Of this total, the income from garden construction was 859 million yuan, an increase of 546 percent, accounting for 89.7 percent, and the gross profit margin was 19.55 percent, an increase of 6.84 percent over the same period last year.
The reasons for the loss in the first quarter are as follows: 1) the revenue recognition decreased due to the season and other reasons; 2) the management expenses after the merger increased; 3) the interest expense from the acquisition and merger was 7.5 million yuan. In 2015, the company completed a major asset restructuring, and the company incorporated its subsidiary Octopus Garden into the merger scope in November 2015. In the first quarter of 2016, the consolidated report increased the data of Octopus Gardens and increased the management expenses; however, due to the Spring Festival holiday and seasonal factors, most of the company's projects were in the stage of construction preparation during the reporting period, and less income was recognized; secondly, in order to complete the reorganization in 2015, the company's capital generated 7.5 million yuan in interest expenditure in the current quarter.
The acquisition of Octopus Gardens strengthens the company's competitiveness in gardening, greening, environmental protection and ecological construction. In March, Octopus Gardens signed a framework agreement of 1.3 billion yuan: in June 2015, the company acquired 51% of Octopus Gardens by cash payment; on October 9, 2015, the company issued 117.5 million shares, paid consideration to acquire the remaining 49% of Octopus Gardens, and raised 114.2 million shares in a non-public offering to replace the cash investment of the previous acquisition of 51% of Octopus Gardens. Performance commitment: 2016-2018 net profit not less than 1.68,2.43,3, and 300 million yuan. March 16 announcement: the Bada Garden and the Zhongshan District Government in Liupanshui signed the Cooperation Framework Agreement on the upgrading and Reconstruction Project of Beautiful villages in Zhongshan District, with a total investment of 1.3 billion yuan.
Profit forecast and investment rating: in the future, the company will actively expand in the field of ecological and environmental governance, especially in the business field of PPP model, to achieve greater growth in revenue scale. Important assumption of profit forecast: based on the small profit or loss of the company before 2014, the performance promise of Octopus Garden is the most important profit guarantee for the company in the future. We estimate that the revenue in 2016-18 will be 16,23 and 3.2 billion yuan respectively, the realized EPS will be 0.19,0.27,0.38 yuan respectively, and the corresponding PE will be 460.33x23X respectively. The valuation is reasonable, considering that the order acceptance capacity of Octopus Garden is higher than expected, and the company's strong financing ability can cooperate with the project to land as soon as possible and give it a "buy" rating.
Risk hint: there may be order execution digestion that is lower than expected.
