Recently, the company announced its 2018 semi-annual report that the company's revenue in the first half of 2018 was 653 million yuan, an increase of 158.3%, and its net profit was 178 million yuan, an increase of 166.56%. The comments are as follows:
The landscape lighting project continues to be booming, and the company's revenue growth continues to increase.
Benefiting from the improvement of the prosperity of the industry, the company won the bid for Futian and Nanshan projects in Shenzhen in the first half of the year, and the order structure is gradually tilting to first-and second-tier cities. 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. In the first half of 2018, the company completed operating income of 653 million yuan, an increase of 158.3%. The company's gross profit margin of the same caliber was 51.1%, down 3.77 percentage points from the same period last year, or due to the strong ability of the owners to pay for some projects, the relevant gross profit margin has been reduced.
During the period of the company, the expense rate decreased significantly, and the net interest rate increased.
The expense rate during the company period was 13.85%, down 7.76 percentage points from the same period last year. Among them, the sales expense rate was 3.84%, down 3.92 percentage points from the same period last year, and the management expense rate was 7.78%, down 5.12 percentage points. The significant decrease in the two expense rates was mainly due to the increase of the single contract volume of the project, and the scale effect was highlighted. In addition, the company's financial expense rate was 2.22%, an increase of 1.28 percentage points, reflecting a slight increase in financing costs under changes in the macro environment, but after the completion of the company's fixed increase, the increase in equity capital is expected to reduce the overall capital cost and ease the capital pressure. The company provides for an impairment of 12 million yuan in assets, an increase of 6 million yuan over the previous value. In the same period, the company's net interest rate was 27.28%, an increase of 0.85 percentage points. The company made a net profit of 178 million yuan, with an increase of 166.56%. The estimated net profit from January to September 2018 is 2.43-258 million, with an increase of 111.45% 124.50%. In addition, Yongqi Lighting made a net profit of 24 million in the first half (accounting for about 48 per cent of the committed net profit in 2018), with a net interest rate of about 22.39 per cent.
The cash flow of the company is relatively stable, and the capital raised has led to a significant decline in the asset-liability ratio.
The company's income-to-cash ratio in the first half of the year was 0.2907, down 1.25 percent from the same period last year; in the same period, the company's cash-to-cash ratio was 0.6382, down 22.62 percent from the same period last year, or indicating that the company's share of upstream funds has increased. In the same period, the net cash flow generated by operating activities is-124 million, which is 12 million more than the previous value. it is expected that with the increase in the proportion of first-and second-tier cities with better payment ability in the pre-construction projects, the cash flow for the whole year is expected to improve under the gradual payback of the previous projects. The company's asset-liability ratio is 45.55%, mainly due to the fixed increase of funds raised in place, the company still has a good ability to expand financial statements. In addition, the company's inventory and accounts receivable turnover have increased significantly.
The competition pattern of the industry is different from that of other sub-industries, and the leading private enterprises will benefit more.
We believe that the biggest difference between the landscape lighting industry and other sub-industries, due to the small scale of the industry, slow growth, less central enterprises, state-owned enterprises, or institutions and private leading companies competing for high-quality orders, this makes in the landscape lighting industry prosperity, private leaders can fully enjoy the return of good high-quality orders, the future cash flow of these companies is worth looking forward to.
Investment suggestion
The company's performance has achieved rapid growth in the first half of 2018, the newly signed order is close to the whole of last year, sufficient on-hand orders and the efficient use of raised funds will accelerate the fulfillment of the order; the improvement of the company's project quality is also expected to significantly improve the full-year operating cash flow. The estimated net profit of homing in 2018-2020 is 4.02,8.01 and 1.226 billion yuan, and the EPS in 2018-2020 is 1.17,2.32,3.55 yuan per share respectively, and the corresponding PE is 17,8 and 5 times respectively. The company already has a high risk-to-return ratio and maintains a "buy" rating.
Risk hint: the promotion of PPP project is not as expected, and the layout of ecological and environmental protection plate is not as expected.