The company recently released its three-quarter report for 2017, with operating income of 322 million yuan in the first three quarters, an increase of 29.63 percent over the same period last year, and net profit of 42.58 million yuan, an increase of 13.03 percent over the same period last year. The comments are as follows.
The extension of business scope, the first order of EPC wins.
In recent years, the company has extended from architectural design business to providing downstream customers with comprehensive engineering and technical service providers covering the whole process of engineering construction industry chain. According to the major contract disclosed by the company, the company recently formally signed the enlightening Science and Technology City Phase I EPC general contract project, with a contract amount of 255 million yuan, accounting for 64.9% of last year's revenue. This is the first order for the company to promote the EPC general contracting business, which is helpful for the company to provide valuable experience for the follow-up promotion of similar projects. Since the company acquired 51% of Billoude in Shenzhen and Beijing in the past 16 years, the company has continued to participate in shares in China Construction Beijing Construction Technology Co., Ltd., Shanghai Dirong data Technology Co., Ltd., Shenzhen Shuimu Enlightenment Industry Development Co., Ltd., and so on. In addition, the company plans to acquire 100% of Shenzhen Jiali in the near future to achieve coordinated development and accelerate the company's business layout in the field of green building and energy-saving engineering. At this point, the blueprint of "planning, planning, design, EPC, PPP, operation and maintenance" is emerging, and the company's market competitiveness will be greatly improved.
Rapid growth in revenue and steady increase in gross profit margin
In the first three quarters of 2017, the company achieved revenue of 322 million yuan, an increase of 29.63%, an increase of 4.35% over the first half of the year, mainly due to the merger of acquired Billoude in Shenzhen and Beijing.
In the third quarter, 106 million yuan per quarter, an increase of 39.55%, with a relatively fast growth rate. The company's overall gross profit margin from January to September was 42.33%, an increase of 3.74% over the same period last year, or due to the rapid increase in gross profit margin of the landscape design and decoration design business, the profit margin is expected to be further released.
During the period, the expense rate has increased, and the net profit of returning to the mother has increased significantly.
The company's expense rate was 24.30% in the first three quarters of 2017, up 4.32 percentage points from last year.
Among them, the sales expense rate was 2.59%, up 1.05%, mainly because the company continued to expand its business and set up a number of branches outside the province; the management expense rate was 22.78%, up 2.91%, mainly due to the increase in equity incentive costs and R & D expenses; the financial expense rate was-1.06%, up 0.38%, basically unchanged. The impairment loss of assets was 4.6432 million yuan, an increase of 262.5%, mainly due to the increase in the provision for bad debts due to more accounts receivable in the company. Taken together, the company's net profit in the first three quarters was 42.5823 million yuan, an increase of 13.03%.
The ratio of receipt and payment to cash has declined, and the operating cash flow has deteriorated.
The company's cash-to-cash ratio in the first three quarters was 0.92, a decrease of 0.11 percentage points compared with the same period last year, and the company's ability to convert current income into cash slightly decreased; cash-to-cash ratio was 0.33, down 0.08 percentage points from the same period last year, less than the decline in cash-to-cash ratio. Taken together, the net cash flow generated by operating activities-15.0296 million yuan, down 196.4% from the same period last year, and the cash flow situation has deteriorated.
Investment suggestion
The trend of business transformation and upgrading of the company is good, there are initial achievements in new areas, and the return net profit continues to rise. If the merger and acquisition is implemented smoothly, the company's EPS will be greatly thickened. From 2017 to 2019, the EPS is expected to be 0.59,0.73,0.87 yuan per share, and the corresponding PE is 70,56,47 times. We are optimistic about the future growth of the company, raising the target price to 48.88 yuan and maintaining the "overweight" rating.
Risk hint: investment growth continues to decline, M & An integration risk