Main points of investment
Da'an shares: the leading enterprise of engineering supervision. The company is mainly engaged in project management services based on project supervision business, including communications supervision, civil construction supervision, bidding agency, project consulting, project construction agent, government procurement agency and other project management services. The company achieved an operating income of 407 million yuan in 2016, an increase of 2.84% over the same period last year, and a net profit of 55 million yuan, an increase of 8.01% over the same period last year. The controlling shareholder and actual control of the company are Wu Junye and Li Tao, who together hold 30.7813 million of the shares, accounting for 48.40% of the total share capital of the company.
The market scale of construction engineering supervision is large, and the industry concentration is low. In 2015, the operating income of China's construction project supervision industry reached 247.494 billion yuan, an increase of 918% over 2005, with an average annual compound growth rate of 24.36%. By the end of 2015, there were 7433 registered enterprises in China's construction engineering supervision industry, of which 3249 were Class A qualified enterprises, accounting for only 44%. The total income of the top 5 enterprises was about 2.6 billion yuan, CR5 was only 1%, the industry concentration was low, and the industry showed a competitive pattern of "state-owned-private" two camps.
Six advantages, such as engineering supervision business, standardized management system and brand, bring up competitiveness. The engineering supervision business is the company's core business, accounting for more than 86% of the revenue, and the gross profit margin is the highest among all businesses, about 32%. The gross profit contribution of the engineering supervision business is the largest, accounting for more than 87%. The company accounts for the highest proportion of revenue in South China, more than 65%, but the proportion is on a downward trend. The company has a standardized management system, won a number of honors, undertaken a number of landmark construction supervision projects, complete professional qualifications, a wide range of coverage, business and marketing network radiation nationwide, has established a high-quality management team and professional team, R & D investment is sufficient, frequent excellent projects.
The future development of the company. In the future, the company will expand its business extensively through product output and diversified operation modes of "project management standard cloud platform" (i.e. "project management standard + Internet platform"). On the basis of the existing communications supervision, civil construction supervision, bidding agency, project construction agent and engineering consulting business, the company will continue to expand its business scope, enhance the company's core competitiveness and risk resistance, and promote the steady growth of the company's profitability.
Profit forecast and valuation: we forecast that the company's net profit from 2017 to 2019 will be 62 million yuan, 67 million yuan and 73 million yuan respectively. Considering the dilution factor of newly issued shares, the corresponding EPS is 0.73,0.79 yuan and 0.86 yuan respectively. With reference to the valuation level of comparable listed companies, and combined with the future development space of the company, we think that we can give 30-40 times PE in 2017, with a corresponding price range of 21.9-29.2 yuan.
Risk hint: the newly signed order is not as expected, the payback risk, and the business development is not as expected.