Events:
On April 24, 2018, the company released its 2017 annual report. During the reporting period, the company achieved operating income of 5.579 billion yuan, an increase of 95.03% over the same period last year; net profit of 844 million yuan, an increase of 148.73% over the same period last year; and basic earnings per share of 0.53 yuan per share, an increase of 140.91% over the same period last year. The company's profit distribution plan for 2017 is to distribute a cash dividend of 0.87 yuan (including tax) to all shareholders for every 10 shares.
Comment
Business income has increased significantly in all business sectors and regions.
In terms of different industries, the company's income from ecological environment construction, agricultural planting and sales, photovoltaic power generation and others was 5.446 billion yuan, 94 million yuan, 21 million yuan and 18 million yuan respectively, up 104.77%,-49.82%, 7789.61% and 42.01% respectively over the same period last year. The proportion of operating income is 92.97% (+ 4.64%), 6.57% (- 4.88%), 0.01% (+ 0.36%) and 0.45% (- 0.12%) respectively.
From a regional perspective, the operating income within and outside the Inner Mongolia Autonomous region during the reporting period was 4.449 billion yuan and 1.129 billion yuan respectively, an increase of 127.67% and 24.64% respectively over the same period last year. The autonomous region is still the main source of business income, and the proportion is on the rise.
From a quarterly point of view, the income from Q1 to Q4 reached 306 million yuan, 2.386 billion yuan, 1.901 billion yuan and 986 million yuan respectively, up 160.89%, 153.47%, 135.92% and-1.03% respectively over the same period last year. The company's revenue grew at a high speed in the first three quarters and declined slightly in the fourth quarter compared with last year. Negative growth in the fourth quarter, on the one hand, due to the northern winter construction off-season, most of the project shutdown, on the other hand, because of the high base of 16 years, coupled with the frequent occurrence of standard PPP documents after the 19th CPC National Congress, some project schedule financing was affected.
The comprehensive gross profit margin and net profit margin have been increased, and the Q4 rebate has been greatly improved.
During the reporting period, the company's gross profit margin was 32.53%, an increase of 0.86% over the same period last year, and the net sales margin was 15.78%, an increase of 2.58% over last year. Among them, the gross profit margins within and outside the autonomous region were 35.40% and 21.23% respectively, an increase of 0.05% and-2.51% over the same period last year, reflecting the strong competitiveness of the company in the region.
During the reporting period, the expense rate during the sales period dropped sharply to 8.25%, down 4 percentage points from the same period last year, mainly due to the decrease in management fees from 8% to 4.43%. The sharp decline in management expenses is mainly due to a substantial increase in income, while personnel growth is limited, and the scale effect is reflected. At the same time, the average return on net assets during the reporting period increased from 13.92% to 26.29%.
During the reporting period, the net cash flow generated by operating activities reached 420 million yuan, an increase of 297.75% over the same period last year.
Q4 is the peak of the company's payback, with a net operating cash inflow of about 1.8 billion in a single quarter, mainly due to the acceleration of government payback after some projects have completed the formalities.
Sufficient orders on hand and good performance guarantee in 2018
During the reporting period, the company signed 136 new construction contracts (including framework agreements and bid winning notices) with a contract value of 17.21 billion yuan, an increase of 335.96% over the same period last year, and signed 540 design contracts with a contract amount of 210 million yuan. 48 seedling sales contracts were signed with a contract amount of 30.4675 million yuan, and 125 forage sales contracts with a contract amount of 15.2945 million yuan were signed. Two testing contracts were signed with a contract amount of 81600 yuan, and four technical service contracts with a contract amount of 6.9 million yuan were signed. The cumulative contract amount was 174.7 yuan, an increase of 302.99 percent over the same period last year. The total amount of orders from 2017 to April 2018 is about 52.485 billion yuan, which is 9.4 times of the 2017 operating income (5.579 billion yuan).
Strengthen research and development to improve the core competitiveness of enterprises
During the reporting period, the company's R & D investment reached 167 million yuan, an increase of 194.34% over the same period last year; R & D investment accounted for 2.99% of operating income, an increase of 1 percentage point over the same period last year. At present, the company undertakes a total of 42 special projects, is implementing 29 projects, has successfully passed 13 acceptance tests, and carried out 38 self-designed scientific research projects. The scientific research project in 2017 focuses on degradation, desertification and salinization, establishing integrated technology for ecological restoration of grasslands, breeding of characteristic native plants, salinization treatment, establishment and promotion of sports lawns, mine management, and ecological big data platform construction. Several directions, research and technical development.
Maintain a "buy" rating
We estimate that from 2018 to 2020, the company's operating income will be 7.47 billion yuan, 9.28 billion yuan and 11.1 billion yuan respectively, an increase of 33.9%, 24.3% and 19.5% respectively over the same period last year; and the net profit of returning home will be 1.19 billion yuan, 1.51 billion yuan and 1.84 billion yuan respectively, up 40.7%, 27.4% and 21.8% respectively over the same period last year. It is estimated that the EPS from 2018 to 2020 will be 0.74 yuan per share, 0.94 yuan per share and 1.15 yuan per share, respectively, and the corresponding PE will be 14 $11 per share, respectively. The company has a strong competitive advantage in Inner Mongolia, and the company has been strengthening the expansion of the external market in recent years. After the issuance of US dollar bonds and corporate bonds, the funds on hand will be very abundant, which is conducive to the landing of the company's projects and the expansion of new projects, and the current valuation is cheap. Maintain a "buy" rating.
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Risk hint
The risk of a slowdown in macroeconomic growth
Risk of impairment of goodwill
Management risk brought by the expansion of operation scale
Regional risk of local economy
The risk of loss of bad debts caused by the high balance of accounts receivable