Main points of the report

Event description

The company released its three quarterly results for 2016.

Event comment

Revenue rose and profits fell, with on-hand orders bringing improved expectations. Chengdu Road and Bridge achieved an operating income of 1.393 billion yuan in the first three quarters of 2016, an increase of 50.10% over the same period last year. The net profit attributable to shareholders was 16 million yuan, down 39.07% and 0.02 yuan compared with the same period last year. The decline in profit was mainly due to a sharp rise in costs in the third quarter. Due to the increase in project orders, the company is expected to make a weak profit this year as the bid-winning project starts one after another. The company forecasts a net profit of 2400-34 million in 2016, an increase of 30% to 80% over the same period last year, and EPS0.03~0.05 yuan for the whole year.

Profitability declined sharply and operating cash flow was stable. The company's sales gross profit margin in the first three quarters of 2016 was 2.15%, down 10.32pct from the same period last year, mainly due to the audit reduction of some project owners and the overall rise in raw materials this year; the net profit margin was 1.18%, down 1.72pct from the same period last year. The expense rate during the period was 5.22%, which decreased by 3.29pct compared with the same period last year. The decline in financial expenses was the main reason for the decrease in expenses during the period. The financial expense rate decreased by 3.29pct to 2.16% compared with the same period last year, mainly due to the decrease in bank borrowing and the reduction in interest expenses caused by the return of prior-stage trust products. The payback of the current phase of the project is better, and the recovery of margin is higher than that of the previous period, resulting in an operating cash flow of 485 million yuan, an increase of 344 million yuan compared with 141 million yuan in the same period last year.

Last year, Q4, Q2 and Q3 realized operating income of 5.17,3.72,6.13 and 408 million yuan respectively, up 46.66%, 99.46%, 82.20% and 0.73% respectively over the same period last year. The net profit attributable to shareholders of listed companies was-0.08,0.09,0.05 and 2 million yuan, up-129.68%, 21.54%, 42.07% and-86.68% respectively over the same period last year. The company's revenue has fallen sharply since 14 years, and although this year's revenue has improved from 15 years, it is still in the lower position since the listing.

The main business is affected by the environment and company strategy, looking forward to order volume to improve performance. The annual performance of the company has declined significantly since 14 years, mainly due to the low macro environment and the appropriate strengthening of risk control, the decline in the number of winning bids and the lack of project reserves have led to a large decline in the company's operating scale in recent years, so the decline in corporate performance in recent years is the result of changes in the macro environment and the company's adjustment of business strategies.

At present, the decline of real estate investment leads to the expected strengthening of infrastructure construction, especially the urbanization of the southwest region is at a lower level compared with the eastern and central regions, there is still more room for infrastructure investment in the future, and the company's main business is concentrated in Sichuan province. with greater location advantages, and the company, as one of the few fully qualified road and bridge enterprises in the province, is expected to fully benefit from the future infrastructure investment drive. The company's order volume has rebounded this year, winning the bid for about 4 billion yuan in the first half of the year, announcing the receipt of the 2.433 billion yuan PPP project in Dazhou in the second half of the year, and signing an intention contract with Yibin City for the comprehensive development of the Yangtze River eco-cultural tourism industry in Nanxi District PPP project. In the future, the company will mainly benefit from the promotion of PPP, especially regional PPP. The first batch of PPP projects of Chengdu Development and Reform Commission in the past 16 years, a total of 39, a total of 126.02 billion yuan, including 19 municipal projects, a total investment of 60.39 billion yuan, is expected to bring PPP orders for the company. With the development of the company's PPP business and the promotion of the project, the future operating income is expected to continue to increase.

Carry out fine management and actively open up markets outside the province: the company implements an accurate management system, focusing on strengthening the management and supervision of key departments and key positions. in particular, the accurate management on the basis of reshaping the functions of branches and subsidiaries has achieved good results, and the rate of company management expenses has been significantly improved. In addition, the company has actively opened up the market outside the province and won the bid to enter the market in Tibet, Jilin and other places. It is expected that the company will continue to develop business outside the province, especially in Tibet, increase the proportion of business outside the province and enhance the flexibility of the company.

Investment suggestion: forecast company 2016-2018 EPS0.04/0.18/0.21 yuan, corresponding to 2016-2018 PE is 198-45-38 times.

Risk tips: economic fluctuations, investment downside risks, PPP development and business development risks.