I. Overview of events:
The company released its annual report for 2017, with revenue of 3.765 billion yuan in 2017, an increase of 52% over the same period last year, a net profit of 240 million yuan, an increase of 26% over the same period last year, and a deduction of 170 million yuan in non-net profit, a decrease of 6% over the same period last year. The basic earnings per share is 0.49 yuan, and the profit distribution plan for 2017 is to increase 4 shares for every 10 shares in the capital accumulation fund.
According to the company's quarterly report for 2018, 2018Q1 achieved a revenue of 988 million yuan, an increase of 45% over the same period last year, and a net profit of 86 million yuan, an increase of 1.73% over the same period last year, deducting 82 million yuan from non-net profit, a decrease of 2.09% over the same period last year. Basic earnings per share is 0.18 yuan.
Second, analysis and judgment:
Financial position: gross profit margin declined, cash flow improved, asset-liability ratio remained stable. The company's gross profit margin fell by 6 percentage points to 27% in 2017, but the company strengthened its expense control and reduced the expense rate by nearly 3 percentage points during the period, which ensured the relative stability of the company's overall profitability. the decline in gross profit margin is mainly due to the decline in revenue from the environmental protection business.
In 2017, the company received 106% Prida and 125% Q1 in 2018Q1, and the cash flow continued to improve. In 2017, the company's asset-liability ratio was 65%, unchanged from the same period last year and at a relatively reasonable level.
Environmental protection business is an uncertain factor, and 2018Q1 lays the foundation for high growth throughout the year. The company's environmental protection business platform is actually committed to a performance of 100 million yuan in 2017, but the actual loss is 14.79 million yuan, which has become the most important factor dragging down the company's performance.
According to the performance commitment agreement, the performance commitment party is required to deduct a total of 10.76938 million shares of the company's shares, which are realized and used to compensate the company. The development of environmental protection business has brought uncertainties to the company.
2018Q1 achieved revenue of 988 million yuan, an increase of 45% over the same period last year. The high growth in the first quarter laid the foundation for the company's high performance growth in 2018. The main reason why the growth rate of 2018Q1 net profit is significantly lower than the revenue growth rate is that the sharp rise in LNG prices in the first quarter led to the narrowing of the company's sales price spread. at present, LNG prices have returned to a reasonable level, and it is expected that the company's net profit growth rate will match the revenue growth rate in the future, showing a strong upward trend.
The environmental protection business is expected to meet the turning point, and the natural gas business continues to improve. The Ministry of Environmental Protection plans to revise the atmospheric emission standards for iron and steel, metallurgy, cement, glass, ceramics and other industries. The standard raising and transformation of atmospheric emissions from non-power industries will bring more than 100 billion investment in environmental protection. Take the iron and steel industry as an example, at present, there are about 900sintering machines in the country, with an area of 116000 square meters and an investment of 500,000 yuan per square meter, with a market space of nearly 60 billion and an annual operating cost of about 18 billion.
Natural gas is an economic and stable clean energy. China's natural gas consumption in 2017 was 2394 billion square meters, an increase of 15% over the same period last year. Under the general trend of clean energy, the company, as a national urban gas company, will benefit from the sustained growth of natural gas consumption in China for a long time.
Third, profit forecast and investment suggestions: it is estimated that the EPS of the company in 2018-20 will be 0.63,0.80,1.01 yuan. Corresponding to PE17, 14, 11 times, the company's environmental protection business to meet the inflection point, urban fuel business continued to improve, maintaining a "highly recommended" rating.
Fourth, risk hints: the improvement of environmental protection business is lower than expected, gas sales and engineering installation revenue are lower than expected.