Main points of the report

Event description

The company publishes its 2016 annual report.

Event comment

Net profit has increased significantly, benefiting from PPP-driven in the future. In 2016, Weihai shares achieved operating income of 2.193 billion yuan, an increase of 15.59 percent over the same period last year, and realized net profit of 93 million yuan belonging to shareholders, an increase of 47.07 percent over the same period last year, and basic earnings per share of 0.09 yuan per share. From a sub-business point of view: the main construction business increased by 17.20% compared with the same period last year, affecting overall revenue, while the technical services business fell by 28.99%. It is expected that the company's performance will reach a record high this year under the catalysis of PPP orders, and the prospect is considerable.

Profitability remains stable. The company's 2016 gross profit margin was 13.18%, down 2.35 pct from the same period last year; net profit was 4.24%, up 0.91 PCT from the same period last year; and the expense rate during the period was 6.37%, down 1.76 PCT from the same period last year. The company's gross profit margin decreased significantly, mainly due to the decline in gross profit margin in the construction business. The operating cash flow was 34 million yuan, an increase of 61 million yuan over 96 million yuan in the same period last year, mainly due to the increase in various deposits and advances this year compared with the previous year and the amount of business tax paid during the operation reform.

In 2016, Q1, Q2, Q3 and Q4 realized operating income of 3.97,4.51,4.82 and 863 million yuan respectively, up 23.81%,-15.22%, 23.27% and 32.05% respectively over the same period last year. The net profit attributable to shareholders of listed companies was 0.04,0.10,0.14 and 65 million yuan, up-47.24%, 24.16%, 212.90% and 49.56% respectively over the same period last year. The company's income is affected by seasonality. Due to the seasonal reasons of settlement, the company's fourth-quarter revenue and profits contribute more to the annual performance.

The company's profit distribution plan for 2016 is a cash dividend of 0.5 yuan (including tax) for every 10 shares.

The overlay carry-over driven by PPP will bring obvious benefits, and the environmental protection field can be expected in the future. Accepting PPP orders this year accounts for 95% of the total orders for the whole year. With the vigorous promotion of PPP, it has brought enough orders for the company, and the future performance is expected to increase significantly with the help of PPP project orders. The company has a strong competitive strength in carrying out environmental protection business, and its business scope will not only cooperate with the company in PPP projects, provide support and participate in later operation and management, but also participate in the transformation of old waterworks, development and utilization of water sources and hydrological landscape beautification, etc., which will have a broad market space in the future. In addition, the company has a larger scale of BT projects in hand, and in the future, with the gradual carry-over of BT projects, the problem of more financial expenses can be better alleviated. At the same time, due to the higher gross profits of BT projects, the company's performance has been greatly improved. It is expected that this year and next year, the BT carry-over will be about 400 million yuan and 900 million yuan respectively, which will make a positive contribution to the performance.

We will actively lay out the entertainment industry and realize cross-industry operation. In 2016, in order to further improve and optimize the profit model and profit structure, the company issued the strategic development plan of the second main business and established the second main business department. Invest in the establishment of Beijing Orange Lexin Entertainment Media Co., Ltd., as the core platform for the layout of cultural entertainment industry. At the same time, it contributed to the acquisition of a 41% stake in Beijing Juguang Picture Technology Co., Ltd., an important step in mergers and acquisitions of the second main business. The future is spacious and imaginative.

Investment advice: the forecast company's EPS for 2017-2019 is 0.27 yuan, corresponding to the 2017-2019 PE is 36-27-21 times, given a "buy" rating.

Risk Tips:

1. Macroeconomic risk

two。 The development and transformation of the company is not as expected.