Main points of investment
The company achieved operating income of 1.781 billion yuan in 2017, down 16.83% from the same period last year, mainly due to the decline in revenue from engineering construction business. The revenue of Q1, Q2, Q3 and Q4 increased by-45.89%,-12.17%, 22.55% and 64.90% respectively over the same period last year; the operating income of engineering construction and equipment sales reached 1.758 billion yuan and 13 million yuan respectively, an increase of-17.77% and 2288.89% over the same period last year; the revenue of electronics and other industries reached 1.691 billion yuan and 79 million yuan, respectively, down 15.66% and 40.21% from the same period last year The domestic and Vietnamese regions achieved income of 1.716 billion yuan and 55 million yuan respectively, an increase of-17.55% and-3.92% over the same period last year, while the operating income of the parent and subsidiary companies reached 1.475 billion yuan and 305 million yuan respectively, up 57.66% and-73.41% respectively over the same period last year.
The company achieved a comprehensive gross profit margin of 13.77% and an increase of 0.13% in 2017, mainly due to the increase in gross profit margin of the engineering construction sector; the net profit margin was 7.20%, down 0.73% from the same period last year, mainly due to the increase in the proportion of management fees and asset impairment losses. The gross profit margin of Q1, Q2, Q3 and Q4 increased by-2.75%, 8.44%,-8.08% and 0.65%, respectively. By business, the gross profit margin of engineering construction and equipment sales increased by 0.99% and-22.86%, respectively. The gross profit margins of projects in the electronics industry and other industries were 13.76% and 12.82% respectively, up 0.38% and 8.26% from the same period last year.
During 2017, the company's rates increased by 1.05% over the previous year, mainly due to the increase in management rates caused by cost rigidity. During the period of this year, the company's expense rate was 4.25%, an increase of 1.05% over the same period last year, of which the management expense rate increased by 1.15%, mainly due to the increase in wages, R & D investment and other expenses; the financial expense rate was-0.32%, down 0.12% from the same period last year.
The company's asset impairment loss accounted for 1.47% in 2017, an increase of 0.94% over the previous year, mainly due to the slow rebate of engineering projects this year. The company's net operating cash flow per share in 2017 was-0.60 yuan, 1.90 yuan less than last year. The sharp decline in cash-to-cash ratio is the main reason for the deterioration of cash flow.
Earnings Forecast and rating: we have downgraded the company's profit forecast. It is estimated that the EPS for 2018-2020 will be 0.70,0.87,1.11 yuan respectively, and the corresponding PE for the closing price on March 29 will be 32.8,26.4 and 20.5 times respectively, maintaining the "prudent overweight" rating.
Risk hints: macroeconomic downside risks, project construction schedule not as expected, overseas business expansion not as expected, risk of exchange losses caused by exchange rate fluctuations, risks of large fluctuations in newly signed orders