Revenue and net profit decreased, newly signed single inflection point appeared
In the first half of the year, the company achieved revenue of 281 million yuan, YOY-10.6%; ownership net profit of 570000 yuan, YOY-96.5%; operating cash flow of-38.32 million yuan, into outflow. In the second quarter, the company achieved revenue of 202 million yuan, YOY-8.6%; ownership net profit of 1.88 million yuan, YOY-87.9%; operating cash flow of-35.91 million yuan, into outflow. The company's performance is basically in line with expectations, 15 years of water conservancy pipe orders delayed, the industry reduced in-hand orders, resulting in a sharp decline in performance. Entering the periodic recovery of water conservancy investment in 2016, the company signed a new order of 963 million yuan this year and is executing the order of 1.333 billion yuan, of which the contract delivery amount is 323 million yuan, and the outstanding contract is 750 million yuan. According to the company's newly signed orders and industry order confirmation cycle, we judge that the company's performance inflection point will appear.
The business of concrete pipe is reduced, the plastic pipe is basically flat, and the marketing is strengthened.
The company's comprehensive gross profit margin in the first half of the year was 34.0%, an increase of 7.1 pct. The revenue of concrete pipes was 140 million yuan, and the gross profit margin of YOY-19.3%; was 39.1%, an increase of 10.6%. The revenue of plastic pipes was 141 million yuan, the same as that of the same period last year, and the gross profit margin was 28.9%, up 4.0%. The decline in revenue was mainly due to a sharp drop in previous orders and an improvement in raw materials, resulting in an increase in gross profit. The rates of sales, management and financial expenses were 10.7%, 19.1% and 1.4%, respectively, with an increase of 3.9Compact 5.2 pct. In addition to the decrease in revenue, the increase in sales expenses was mainly due to the expansion of the company's market area, the increase in bidding fees, pipeline freight and employee compensation; the increase in administrative expenses such as depreciation and R & D; and the increase in loans led to an increase in financial expenses. In terms of working capital, there is no obvious change in the proportion of items such as inventory and accounts receivable.
The northwest leader carries out diversified layout and is optimistic about the construction of water conservancy and water affairs and pipe corridors.
The company is one of the leading enterprises of water supply and drainage pipelines in Northwest China. In the first half of the year, the company will increase sales, continue to consolidate its regional position, actively expand water resources development and pollution control, and promote intelligent water conservancy and water services business. The company's recent performance is driven by the national water conservancy investment cycle, and the decline in water conservancy investment at the end of the five-year Plan leads to a decline in the company's performance. Since the beginning of 16 years, a number of large-scale projects in the industry have been promoted, and the order situation indicates the inflection point of the company's performance. at the same time, the first echelon market share of the concrete pipeline industry has reached 70%, and the stabilization of water conservancy investment will lead to a reversal of the company's performance. in addition, the company's layout in water and underground pipe corridors will help boost growth and consolidate the company's position in the industry. We judge that the company's growth rate is likely to stabilize in the medium term.
The inflection point of the order appears, maintaining the "buy" rating.
It is estimated that the company's EPS for 2016-2018 will be 0.17 pound 0.19 won 0.22 yuan. The company is the leader in the pipe industry in Northwest China, with good asset quality. Considering the market expectations and orders of the water conservancy industry and underground pipe gallery, and based on the characteristics of the concrete pipeline industry, the company is approved to give a valuation of 2.3 to 2.4 times PB, with a target price of 12.28 to 12.82 yuan, maintaining a "buy" rating.
Risk tips: the landing of water conservancy investment slows down; the price of raw materials fluctuates; industry competition intensifies, etc.