The performance of the two main lines of epitaxial M & An and EPC will be thickened, and the growth can be expected.

The company recently released its annual report for 2017, with an annual operating income of 508 million yuan, an increase of 29.53%, and a net profit of 70 million yuan, an increase of 13.23%. The comments are as follows.

The performance of epitaxial mergers and acquisitions has greatly increased, and the gross profit margin has increased steadily.

The company's revenue for the whole year of 2017 increased by 29.53%, mainly due to the acquisition of Shenzhen Billoude and Beijing Billoude to achieve full-year and smooth completion of performance commitments. With the help of abundant cash on hand and good capital structure, the company's extension mergers and acquisitions are active. During the reporting period, it has successively participated in Beijing Construction Force, Shanghai Dirong data, and Shenzhen Shuimu Enlightenment. 100% of Jiali's shares in Shenzhen have also been successfully transferred, and it is expected to be listed for 10 months this year. It is expected to further enhance the company's performance.

The company's overall gross profit margin was 43.57%, an increase of 2.03 percentage points, mainly due to an increase in gross profit margin in the architectural design industry, which accounts for 89% of revenue. In the future, with the improvement of the company's "planning, design, operation and maintenance" industry chain and the promotion of industry discourse, the company's design main business gross profit margin has room for further improvement.

EPC is emerging, and another main line of future performance growth

The company has gradually transformed into a comprehensive service provider in the whole process of engineering construction industry chain. During the reporting period, the company officially signed the enlightening Science and Technology City Phase I EPC general contract project, with a contract amount of RMB 255 million, and has officially entered the implementation stage during the reporting period. It is expected to contribute nearly 100 million of the company's revenue in the next two years, accounting for about 15% of the company's 2017 revenue, which is one of the important growth points of the company's future performance.

During the period, the expense rate increased, and the net profit of homing increased significantly.

The company's expense rate during 2017 was 22.28%, an increase of 1.47 percentage points. Among them, the sales expense rate was 2.20%, up 0.80%, mainly due to the company's continuous expansion of business, the establishment of a number of branches outside the province led to a substantial increase in sales expenses; the management expense rate was 20.85%, up 0.32%. Mainly due to the increase in equity incentive costs and R & D expenses of the company. The loss of impairment of assets was 13.73 million yuan, an increase of 389%, mainly due to the increase in the loss of bad debts. To sum up, the company's net interest rate fell 1.99 percentage points year-on-year to 13.86%, and the return net profit grew by 13.23%. As Shenzhen Jialida completed the transfer of ownership and table in February, the company's performance is expected to achieve rapid growth if the promise of deducting 54 million yuan in non-net profit in 2018 is successfully completed.

The ratio of receipt, payment and cash has declined, and the operating cash flow is still good.

During the reporting period, the cash-to-cash ratio of the company was 98.65%, down 5.86 percentage points from the same period last year; and the cash-to-cash ratio was 30.69%, down 0.2 percentage points from the same period last year. Overall, the net cash flow generated by operating activities was 85.13 million yuan, down 16.17% from the same period last year, but it was still in good health.

Investment suggestion

Epitaxial mergers and acquisitions have greatly thickened the performance of the company, the layout of the whole industry chain of engineering construction has been completed, and the voice of the industry has been continuously strengthened. Shenzhen Jialida completed the transfer of ownership in February 2018 and began to express and assume that this year's performance commitment has been successfully completed, as a result, we have greatly raised the company's profit forecast, the net profit forecast for 2018-2019 has been adjusted from 0.90 yuan and 107 million yuan to 1.26 yuan and 160 million yuan, and the net profit forecast for 2020 is 184 million yuan. From 2018 to 2020, EPS is 0.93,1.19,1.37 yuan per share, corresponding to PE is 38,30,26 times, maintaining the "overweight" rating.

Risk hint: the growth rate of fixed asset investment is declining rapidly; the risk of M & An integration