Events:
The company released its third quarterly report of 2018 on October 30th, 2018.2018. In the first three quarters of 2018, the company realized operating income of 778 million yuan, an increase of 52.65% over the same period last year, a net profit of 85 million yuan, an increase of 55.52% over the same period last year, and a net profit of 84 million, an increase of 56.65% over the same period last year. Of this total, Q3 realized operating income of 319 million, an increase of 48.91%, and a net profit of 35 million, an increase of 44.37%.
Viewpoint:
The listing accelerates the transformation of the order, and the highly elastic performance growth is in line with expectations. The company took advantage of the opportunity to speed up the bill-taking and vertical integration transformation after IPO in March 2017. in 2017, the revenue ratio of 1.71 billion of newly signed orders was about 2 times that of the corresponding period, which was significantly higher than that before listing, and the receipt of orders was further accelerated since it entered 2018. The total number of newly signed orders in the first three quarters was 2.85 billion, an increase of 97% over the same period last year, and about 3.7 times the corresponding revenue ratio. At present, there are 5 PPP projects in hand, with a total investment of 2.81 billion, and the project construction period is all in 2-3 years, strongly supporting future performance. We believe that the cumulative static capital investment of the company's PPP project is only 220 million, and the proportion of remaining subscription is relatively low after payment by installments. the relevant projects are matched by government special funds and long-term loans from local banks, so the pressure on the capital side is limited, and the company reports an asset-liability ratio of 63% at the end of the period, which still has more room than benchmark enterprises in the industry. The abundant reserve of orders has promoted the rapid growth of core business, with revenue / homing increasing by 53% and 56% respectively in the first three quarters of 2018.
Both the gross profit margin and the period rate have increased, and the overall profit level has increased steadily. In the first three quarters, the gross profit margin was 25.57%, with an increase of 0.9 pct, and the sales / management / financial rate was 0.48%, 9.54% and 2.61%, respectively, with a change of 0.48 /-1.75 / 1.43 pct, with a total period rate of 12.63% and an increase of 0.16 pct. It is judged that the increase in gross profit margin is mainly due to the increase in the contracting business of PPP and EPC, the improvement of project gross profit margin, and the transfer of some operating costs to sales expenses after readjusting the subdivision of accounting items. The increase in the rate during the period is mainly due to the increase in the sales rate from 0% in the same period last year to 0.48% during the reporting period due to the re-breakdown of accounting accountings. in addition, with the increase in PPP/EPC business, the demand for advance capital increased, and the increase in loans led to an increase in financial fees. The net interest rate increased by 0.21 pct at 10.97%, steadily rising.
The cash-to-income ratio declined at the same time, and the cash outflow from operation and investment increased. The cash-to-pay ratio in the first three quarters was 44.89%, 71.08%, respectively, with a decrease of 22.3 / 34.3 pct respectively, and a net operating cash outflow of 171 million, an increase of 17%, which was caused by advance capital during the construction phase of the project. The net outflow of investment cash flow was 220 million, up 172%, mainly due to investment projects, the purchase of office buildings and the purchase of subsidiaries. The net cash flow of fund-raising was 422 million, an increase of 23%, due to the expansion of business and new loans.
Conclusion:
The company has accelerated the bill-taking transformation since IPO, and the abundant order reserve has promoted the revenue / homing increase of 53% and 56% respectively during the reporting period, and forms a strong support for the high performance growth in the future. As a result of the optimization of the business structure, the gross profit margin and the overall profit level have improved, and the business characteristics have led to an increase in cash outflow from operations and investments. We expect the company's operating income from 2018 to 2020 to be 1.275 billion yuan, 1.85 billion yuan and 2.409 billion yuan respectively, and earnings per share of 0.67 yuan, 0.90 yuan and 1.16 yuan respectively, corresponding to PE 14.6x, 11x and 8.5x respectively, maintaining the "recommended" rating.
Risk tips: fluctuation risk, financial risk and market competition risk of infrastructure and real estate investment
