Events:
The company released its annual report for 2017: annual revenue of 5.579 billion, an increase of 95.03%, a net profit of 844 million, and an increase of 148.73%, 0.53 yuan per share.
The company released its quarterly report for 2018: revenue reached 490 million, an increase of 58.89%, and a net profit of 17 million, an increase of 48.38%.
Comments:
The decline in performance in the fourth quarter is difficult to stop the high performance increase for the whole year. In terms of quarter to quarter, the company's revenue from Q1 to Q4 in 17 years is respectively 3.06max 23.86 million (YOY + 160.89%), the net profit of homing mother is 1.03% (YOY + 157.05%), and the growth rate of revenue and performance in the fourth quarter is significantly lower. It is mainly due to the impact of PPP policy and capital pressure in the fourth quarter. We believe that the implementation of pollution prevention and control and the construction of ecological civilization are unabated, the market prospect is still bright, the company is the leader of ecological governance in the northwest, and the regional advantages and strong scientific research capabilities make the moat relatively deep.
We will increase investment in research and development and consolidate core competitiveness. The company adheres to the concept of "scientific research before repair" and continues to improve its own scientific research capability. in 15-17 years, the number of R & D personnel has increased year by year (68-73-85), and the proportion of R & D investment in revenue has increased year by year (0.94%). It has gathered the resources of top experts and systematic scientific research teams in related fields in China, and set up a total of 13 ecological research institutions. The company has built and released the Mongolian grass big data platform, which is expected to break the traditional business mode and gradually upgrade the ecological management business to a new level of digitalization, informationization, networking and automation.
As orders soar, beware of local financial risks. The amount of newly signed contracts (including frame and bid winning notice) for the company's 17-year project construction business has reached 17.2 billion (YOY+336%), accounting for 98.5% of the total contract value. In the past 17 years, the proportion of the company's business in Inner Mongolia Autonomous region has increased by 79.76% 11.44pct, and the regional concentration of business is obvious. From 15 to 17, the public budget revenue of Inner Mongolia Autonomous region is 19.64.4 billion yuan and the public budget expenditure is 452.63 billion yuan, respectively. The financial pressure is great, so it is worth looking forward to replicating the "Mongolian grass business model" across regions.
Financial forecast and valuation: the business income of the company in 18-20 is 75.1,97.7 and 11.78 billion, the net profit is 11.5,15.5 and 1.96 billion yuan, the EPS is 0.72,0.96,1.22 yuan respectively, and the corresponding PE is 14.1x, 10.5x and 8.3x respectively, maintaining the "buy" rating.
Risk hint: the promotion of the PPP project is not as expected, and the regional risk of the local economy.