Items:
Meichen Ecology released its 2018 semi-annual report that 18H1 achieved a net profit of 310 million yuan, an increase of 30.74% over the same period last year, which is basically in line with expectations. With the steady growth of the company's garden business, auto parts business continues to pick up, infrastructure investment increased in the second half of the year, coupled with the marginal improvement of the company's financing environment, the company's performance is expected to exceed market expectations. We estimate that from 2018 to 2020, the company will have an EPS of 0.57,0.79,1.06 yuan, maintain its target price of 10.34 yuan, and maintain a "push" rating.
Comments:
The garden business is growing steadily, and the financing environment is expected to improve marginally: the company's 18H1 return net profit is 310 million yuan, an increase of 30.74% over the same period last year, which is basically in line with expectations (30.08%-56.26%). The company's main garden business achieved revenue of 989 million yuan, an increase of 21.37% over the same period last year. Among them, the growth rate of municipal garden revenue with high gross margin is faster than that of real estate gardens, which will promote the overall profitability of the company's garden business. The market believes that the company's garden business may be affected by the tightening of PPP policies and the slowdown in fixed investment. We believe that the impact of PPP clearance and suspension in individual areas has fully reflected that the country may increase investment in infrastructure in the second half of the year, coupled with the strengthening of ecological and environmental protection requirements, the company's garden business will maintain a high growth trend throughout the year. At the same time, the company announced that it intends to issue medium-term notes of no more than 500 million yuan, and the financing environment is expected to improve marginally.
Ecological construction has been improving for a long time, and the garden leader is always strong: the report of the 19th CPC National Congress promoted the construction of ecological civilization to a "millennium plan". China's ecological construction industry has been improving for a long time, and landscape engineering is an important part of ecological construction. as one of the leading enterprises in the garden industry, the company is expected to benefit from the development opportunities of China's garden and culture and tourism industry for a long time. Since 2018, the company has won a total of 828 million yuan in bid orders and signed a framework agreement of 6.65 billion yuan. The period from the framework agreement to the landing of the order is generally 5-12 months. The company has sufficient orders on hand, and the growth rate of 18-19 years is expected to be better guaranteed.
The automotive industry continues to pick up, and the company's spare parts business can be expected in the future: in the first half of 2018, China's automobile production and sales completed 14.06 million and 14.07 million respectively, an increase of 4.15% and 5.57% respectively over the same period last year, of which 670000 were sold in the heavy truck market, an increase of 15.11% over the same period last year. The company's auto parts business continued to benefit from the recovery of the auto industry. 18H1 achieved revenue of 561 million yuan, an increase of 16.94%, improved profitability and contributed considerable profits. The company actively eliminated backward production capacity, accelerated the release of high-quality production capacity, and increased the market share of automotive rubber products. We believe that China's auto market is still expected to maintain steady growth in the second half of the year, and the company's auto parts business can be expected in the future.
Profit forecast, valuation and investment rating: from 2018 to 2020, we expect the company to achieve an income of 55.07,74.45,9.79 billion yuan, a net profit of 8.35,11.51,1.546 billion yuan, and a compound net profit growth rate of 36.34%, corresponding to EPS0.57, 0.79,1.06 yuan. the company's cash flow has continued to improve since 17 years, and the ability to recover money from PPP business has been enhanced. Maintain the target price of 10.34 yuan and maintain the "push" rating.
Risk hint: the municipal garden business has the risk of government payback; the future order acquisition and completion progress is not as expected.
