Slow growth is a normal phenomenon in the off-season.
The company achieved revenue of 241 million yuan in the first quarter of 2016, and YoY+25.07%; achieved a net profit of 9.18 million yuan, YoY+21.31%. As the off-season of the company's traditional business, the reference significance of the performance in the first quarter is limited. We judge that the company's full-year performance will continue to grow at a high level, as evidenced by the significant increase in newly signed contract orders and accounts receivable. The newly signed contract amount in the first quarter is 446 million yuan, YoY+103.95%. Accounts receivable increased to 287 million yuan, YoY+126.94%. The company forecasts that the net profit of 2016H1 belonging to listed shareholders is 3459-5188 million yuan, YoY+0.00%~50.00%.
Profitability has remained stable and expense rates have increased
The company's gross profit margin in the first quarter of 2016 was 19.76%, down 0.28pct from the same period last year, and the net profit rate was 3.49%, down 0.12pct from the same period last year. During the period, the expense rate was 17.04%, an increase of 0.94pct over the same period last year. The increase in the rate of financial expenses 0.62pct is mainly due to the company's increased investment in the construction of smart city projects and the development of the "smart city model". The rate of sales expenses and management expenses also increased by 0.05pct and 0.27pct respectively. The net operating cash flow is-171 million yuan. The main reason for YoY-98.54%, is that the company speeds up the progress of the project and pays the corresponding purchase payment. This is reflected in the cash items paid for the purchase of goods and services, from 197 million yuan in 2015Q1 to 329 million yuan in the current period.
Non-public issuance awaits approval, emerging businesses accelerate their landing
The company announced on the evening of March 2, 2016 that the application for non-public offering has been examined and approved by the audit committee and is awaiting the official documents approved by the CSRC. Important fund-raising projects include: Changchun comprehensive cloud information platform for the aged (investment 108 million yuan), Chongzhou intelligent medical project investment (84 million yuan), user-side energy Internet construction and operation project investment (447 million yuan). After completing the fixed growth, the company will get more industrial capital and financial capital support, on the one hand, lay a solid foundation for the implementation of fund-raising projects, and on the other hand, help the company to accumulate more city and platform project construction experience in emerging business areas.
Zhicheng model is becoming more and more mature, combined with PPP model, deeply involved in local urban construction.
At present, it has eight Zhicheng companies, and will continue to develop markets in Hefei, Nanchang, Qingdao, Langfang and other places in the future. With the rise of the PPP model, the company will also make full use of the transformation from the acquisition of individual projects in the past to the acquisition and participation of the city's overall business. Create a larger market for intelligent building business and create a good market environment for smart medicine. Smart Healthcare expects high growth and maintains a "buy" rating. We predict that the company will have an EPS of 0.22, 0.30 and a YoY+58%/34%/35%, CAGR of 0.40 yuan and 42% in 2016-18. Considering the industry valuation and the company's performance growth, especially the increase in the profit share of software and service business, the company can be given a 16-year 50-55 times PE, a reasonable valuation range of 11-12.1 yuan, and maintain a "buy" rating.
Risk hint: the development of smart medical business is not up to expectations, and the development of smart energy-saving business is not up to expectations.
