Main points of investment
Events:
The company disclosed that from January to September, the total operating income was 453 million yuan, an increase of 40.7% over the same period last year, and the net profit was 91.11 million yuan, an increase of 7.9% over the same period last year. The net profit after deducting non-return was 78.96 million yuan, a decrease of 5.5% over the same period last year.
Among them, the operating income in the third quarter was 167 million yuan, an increase of 55.8 percent over the same period last year, and the net profit was 26.67 million yuan, an increase of 2.0 percent over the same period last year. The net profit after deducting non-return was 21.04 million yuan, a decrease of 17.8 percent over the same period last year.
The company expects the net profit for 2017 to increase by 0% muri 40%, corresponding to a range of 126 million yuan to 177 million yuan.
Comments:
The volume of the project is gradually increasing, and the income growth rate is rising. The company's Q3 revenue grew by 55.8% in a single quarter, up 23.0 percentage points from Q2, and has been growing at more than 30% for four consecutive quarters since Q4 last year. We judge that the contract between the pre-project end and Evergrande has been gradually transformed, and the balance of accounts received in advance in the third quarterly report has dropped by 18.38 million yuan to 140 million yuan, which may be the main reason for the increase in growth. It is expected that the retail end will also have a good performance driven by the adjustment of marketing channels and the expansion of outlets. The company signed a strategic cooperation agreement with Evergrande in May. In addition to the purchase amount of 500 million yuan in three years, the total amount of intended purchase from 17 to 21 years is expected to reach 1 billion yuan. In addition, the strategic cooperation between the company and other real estate developers is also advancing steadily, and the acceleration of the engineering side is expected to provide strong support for the rapid growth in the next few years.
The decline in gross profit margin and the investment of superimposed expenses continued to restrain the profit side from rising synchronously. The company's Q3 single-quarter gross profit margin was 39.5%, down 9.3% from the same period last year, and 10.2% lower than Q2, which is expected to be mainly due to the increase in the proportion of the engineering side in the channel. At the same time, the increase in the year-on-year promotion frequency of the company and the rise in raw material costs also have a certain impact. The company's expenditure continued in the third quarter. Sales expenses and management expenses in a single quarter increased by 63.1% and 70.2% compared with the same period last year, with corresponding expense rates of 12.75% and 12.26%, respectively, an increase of 0.6% and 1.0% over the same period last year. The increase in sales expenses is still expected to be caused by a substantial increase in advertising and other expenses under the strengthening of brand promotion and promotion efforts. The expansion of management expenses is mainly due to the increase of consulting fees of the company and the cost of managers of holding subsidiaries. The decline in gross profit margin and the persistently high cost input are also important reasons for the sharp decline in the company's net profit margin (15.4% per quarter, a decrease in 8.7pct compared with the same period last year) and no synchronous acceleration on the profit side.
The scale of accounts receivable has expanded significantly, but there is still plenty of money on hand. The company's accounts receivable at the end of the third quarter was 28.15 million yuan, an increase of 65.8% over the same period last year, mainly due to the company's increase in credit sales in order to open up key markets, reflecting the company's more active expansion strategy. The balance of the advance payment of the company reached 40.5 million yuan, an increase of 60.2% over the beginning of the year, due to the increase in the advance payment for the purchase of raw materials, indicating that the company had prepared stocks in advance in response to fluctuations in aluminum prices. In addition, the company's inventory balance at the end of the third quarter was 66.59 million yuan, an increase of 68.3% over the same period last year, mainly due to the increase in product reserves brought about by the increase in sales orders. considering that the number of inventory days is still lower than that of Q3 last year, it shows that the current market demand is good. The net cash flow generated by the company's operating activities in the first three quarters was 207 million yuan, an increase of 194.3% over the same period last year, and also increased after excluding the influence of Evergrande's advance payment, indicating that the impact of engineering end expansion on cash flow is within a reasonable range. The company reported in three quarters that it had a capital of 338 million yuan on hand, and the balance of other current assets was 175 million yuan (mainly financial products). There is still plenty of cash, and there is no need to worry about the financial pressure caused by the volume of short-term projects.
Investment advice:
The company's retail channel and engineering channel have made positive progress, and the revenue has accelerated, but in the short term, the profit side is generally restricted by the concentrated input of expenses. After channel adjustment, the improvement of quality and efficiency of the retail side and the release of engineering sales still need to be further revealed.
In the long run, residents' improved housing purchase gradually occupies a dominant position, and the upgrading of built-in consumption is obviously accelerated. Integrated ceiling can meet the dual needs of consumer decoration and functionality, and has a strong consumer attribute. As the first brand in the industry, the company has a good development prospect.
We expect the company's 2017-2019 net profit to be 152 million yuan, 215 million yuan and 272 million yuan, respectively, and EPS 1.73,2.45 and 3.10 yuan, corresponding to 32,23,18 times PE, maintaining the "buy" rating.
Risk hint: the real estate falls faster than expected, and the competition in the industry intensifies.