Main points of investment
The company achieved operating income of 1.584 billion yuan in the first three quarters of 2016, an increase of 28.08% over the same period last year. The company's revenue in Q1, Q2 and Q3 increased by 27.35%, 23.57% and 33.21% respectively compared with the same period last year. Q3 income growth was faster than that of Q2, mainly due to the revenue growth contributed by the recovery of real estate sales to the new construction of decoration and photovoltaic construction projects.
The company achieved a comprehensive gross profit margin of 13.69% in the first three quarters of 2016, down 0.60% from the same period last year. The company's gross profit margin in Q1, Q2 and Q3 increased by-0.04%,-0.01% and-1.65% respectively compared with the same period last year, and the gross profit margin decreased in all three quarters, mainly due to the rise in the price of building materials. The company achieved a net interest rate of 4.73% in the first three quarters of 2016, an increase of 0.42% over the same period last year, mainly due to a 1.98% decline in business tax and additional share compared with the same period last year, and an increase of 1.15% in investment income.
The company's period expense rate decreased in the first three quarters of 2016 compared with the same period last year. The period expense rate of the company in the first three quarters was 4.78%, down 0.58% from the same period last year, mainly due to the decline in management rates, of which the financial expense rate was 1.08%, an increase of 0.31% over the previous year, mainly due to the increase in interest expenses on short-term loans in the current period. The investment income in the current period was 21 million yuan, an increase of nearly nine times over the same period last year, mainly due to the increase in revenue from the photovoltaic grid-connected generation of Xinyi Solar (Liu'an).
The company's asset impairment loss accounted for 3.68% in the first three quarters of 2016, an increase of 2.87% over the same period last year, mainly due to the increase in accounts receivable and changes in the aging structure of accounts receivable, of which the balance of accounts receivable increased by 21.07% compared with the beginning of the period.
The company's net operating cash flow per share in the first three quarters of 2016 was-0.14 yuan, an increase of 0.84 yuan per share over last year, mainly due to a reduction in project expenditure.
On the balance sheet side: a sharp increase in advances indicates that follow-up revenue is expected to accelerate. The end-of-period balance of the advance payment increased by 186.45% over the beginning of the period, mainly due to the increase in the advance payment of materials for photovoltaic construction projects, which indicates that the company's follow-up income is expected to accelerate; moreover, the balance at the end of the long-term equity investment was 323 million yuan, an increase of 223.19% over the beginning of the period, mainly due to the increase in investment in Xinyi Solar (Liu'an). The rapid growth of photovoltaic investment is expected to drive the volume of photovoltaic business income.
Profit forecast and rating: from 2016 to 2018, the company's EPS is expected to be 0.63,0.89 and 1.17 yuan respectively, corresponding to 77.9 times, 55.2 times and 41.9 times of PE respectively, maintaining the "overweight" rating.
Risk tips: macroeconomic downside risks, new business expansion is not as expected