Recently, the company issued a semi-annual performance forecast for 2018, with a net profit of 171 million yuan to 1.905 yuan in the first half of 2018, an increase of 156% to 185% over the same period last year. The comments are as follows:
The half-year return net profit has exceeded that of last year, laying a good foundation for the high growth of the annual performance.
The median growth rate of the company's home net profit in the first half of the year was 170 per cent, up about 100 percentage points from 70 per cent in the first quarter; the median return net profit was 181 million yuan, which exceeded that of last year, laying a good foundation for this year's high performance. We believe that the high prosperity of the landscape lighting industry (the rapid growth of newly signed contracts) and the fixed increase of funds raised (the net amount raised is 863 million yuan, of which 550 million yuan is replenished to accelerate the landing of the project) are the main reasons for the high growth of the company's performance. In addition, the merger of Yongqi Lighting acquired by the company (which began in April 2018, with a performance commitment of 50 million yuan in 2018) also provides a considerable increase in net profit for the company.
As the landscape lighting project continues to be prosperous, attention should be paid to the possible resonance effect of the plate in the future.
The recent brightening landscape of the Qingdao Shanghai Summit has left a deep impression on the Chinese people. Under the background of limited local government investment, the landscape lighting project with small investment and obvious effect will become a good choice for all kinds of large-scale activities and to enhance the appearance of the city and increase the satisfaction of residents. The company has been deeply involved in the G20 light show and the lighting project of the Qingdao Shanghai Cooperation Summit. Under the demonstration effect of such projects that have attracted worldwide attention, the high prosperity of the landscape lighting industry is expected to be further maintained. In addition to celebrities, listed companies such as Liad (the revenue of night travel economic sector increased 99% year on year in 17 years), Alto Electronics (246% revenue growth in 17 years of acquisition of Qianbaihui), Huasi Technology (revenue growth of 215% in 17 years of landscape lighting projects), and Zhouming Technology (the 17-year revenue growth of Hangzhou Cypress year of merger and acquisition) have all achieved substantial growth. Attention should be paid to the plate resonance effect brought about by the sustained and rapid growth of the future performance of these companies' landscape lighting business.
The competition pattern of the industry is different from that of other sub-industries, and the leading private enterprises will benefit more.
Our team released a report two weeks ago, "Landscape Lighting is significantly different from other sub-industries, and private leaders benefit more", which expounds the biggest difference between the landscape lighting industry and other sub-industries, due to the small scale and slow growth of the industry before. Fewer central enterprises, state-owned enterprises, or institutions and private leading companies compete for high-quality orders (while there are local garden bureaus and greening brigades in the garden industry) This makes when the prosperity of the landscape lighting industry is improving, private leaders can fully enjoy high-quality orders with good returns, and the future cash flow of these companies is worth looking forward to.
Investment suggestion
The company's newly signed orders this year are close to the whole of last year, sufficient orders on hand and the efficient use of raised funds will accelerate the fulfillment of orders; the improvement of the quality of the company's projects is also expected to greatly improve the company's operating cash flow. As a result, we have raised the company's profit forecast, from 3.74,6.41 and 983 million yuan to 4.02,8.01 and 1.226 billion yuan in 2018-2020; the EPS from 2018 to 2020 is 1.17,2.32,3.55 yuan per share respectively, and the corresponding PE is 17,8,5 times respectively. The company already has a high risk-to-return ratio and maintains a "buy" rating.
Risk hint: project payback is not as expected, M & An integration is not as expected.