Events:
The company released its 2018 semi-annual report on August 21, 2018.2018. In the first half of 2018, the company achieved operating income of 1.38 billion yuan, an increase of 20.02% over the same period last year; net profit of 130 million yuan, an increase of 25.48% over the same period last year, and an increase of 18.17% over the same period last year. Of this total, Q2 realized an operating income of 966 million, an increase of 12.17%, and a net profit of 114 million, an increase of 22.8%.
Viewpoint:
1. The decline in performance growth does not hinder our long-term optimistic judgment on the company.
Performance growth has slowed. During the reporting period, revenue reached 1.38 billion, an increase of 20.02%, and a net profit of 130 million, 25.48% and 18.17%, respectively, which was significantly lower than the level of revenue / profit of 69% and 75% respectively in 2017. we judged that it was affected by the EPC project of Liangshan Film and Television Base to a certain extent. The project was signed in mid-2017, with a contract value of 730 million, accounting for 28.5% of annual revenue. Construction has not yet started at the end of the reporting period and is expected to be suspended.
Still optimistic about the long-term development of the company. The reasons include:
There are plenty of orders on hand. The company adheres to a steady style and focuses on selecting projects with good capital recovery expectations. at present, projects that take up a large amount of funds and have uncertainty about the availability of funds have taken the initiative to give up in the company's business choices, and only high-quality large-scale projects (including EPC and PPP projects) continue to follow up. In this context, the value of newly signed contracts in the past four quarters was 670 million / 1.37 billion / 1.37 billion / 1.77 billion, still increasing month-on-month. At the end of the reporting period, unfinished orders signed at the end of the reporting period totaled 5.97 billion, accounting for 2.3 times the annual income ratio in 2017, providing a strong support for the year's performance. In addition, the policy continues to strengthen the field of ecology, culture and tourism, the market space is still vast, and the company's future performance is expected to continue to benefit from market development.
(2) there is still much room for asset-liability ratio. At the end of the reporting period, the company's asset-liability ratio was 34.76%, which was 14 / 9.2 percentage points lower than that of 2017H1/2017, which belongs to a lower level among listed garden companies, and only higher than Greenland Ecology (22%) and Hangzhou Garden (32%) among the 13 garden companies reported in the disclosure, leaving plenty of room for accelerating the undertaking of PPP/EPC business in the future.
(3) the national layout and the performance of many regions are growing rapidly. After the company went public in 2015, it accelerated its national layout. The proportion of business in South China decreased from 32% to 15% in 2015-2018H1, while the proportion of business in Southwest / Central China / North China increased significantly. During the reporting period, the income of Central China / East China / North China / Northeast China increased by 41%, 42%, 364% and 23.5% respectively.
two。 The operation is sound, the profit level is rising steadily, and the business development leads to the increase of operating cash outflow.
The operation was sound, the gross profit margin and period rate increased slightly compared with the same period last year, and the overall profit level increased steadily: in the first half of the reporting period, the gross profit margin was 18.73% with an increase of 0.2 pct, and the sales / management / finance was 0% pct 5.03% and 1.98% respectively, with the management rate minus 0.4 pct and the financial rate increasing 1.1 pct, mainly due to interest and service charges. The total rate for the period is 7.00%, which is 0.70 pct more than that of 2017H1/2017 in the whole year. The net interest rate increased by 0.41 pct with 9.41%, steadily rising, reflecting the sound operation of the company.
The cash-to-cash ratio decreased significantly, while the operating cash outflow increased: during the reporting period, the company's cash-to-cash ratio was 58.9% and 67.4%, respectively, a decrease of nearly 9.3 / 12 pct compared with the same period last year. The net operating cash flow-128 million increased compared with the same period last year-71 million, mainly due to the purchase of goods and services. The net cash flow of investment activities was-110 million, which was basically the same as-108 million in the same period last year. The net cash flow of fund-raising activities was 859 million, a substantial increase over 171 million in the same period last year, mainly due to 822 million raised by 2018.4 companies.
Conclusion:
During the reporting period, the growth rate of the company's performance declined significantly due to a large base and increased the impact of project stagnation. The operation remained sound, the gross profit margin and period rates increased slightly compared with the same period last year, the overall profit level increased steadily, the cash-to-cash ratio decreased significantly, and the operating cash outflow increased as a result of business growth. We believe that the company has plenty of orders on hand, there is still plenty of room for asset-liability ratio, effective cross-regional development, and continue to be optimistic about the long-term development of the company. It is estimated that the company's operating income from 2018 to 2020 is 3.466 billion yuan, 4.674 billion yuan and 6.296 billion yuan respectively; earnings per share are 0.6,0.82 yuan and 1.13 yuan respectively, corresponding to PE 11.9x, 8.6x and 6.3x respectively.
Risk tips: management risk, financial risk, project implementation is not as expected