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 1.695 billion yuan, an increase of 76.19% over the same period last year; net profit of 51 million yuan, an increase of 145.21% over the same period last year; and net profit of 37 million yuan, an increase of 79.07% over the same period last year. Of this total, Q3 realized operating income of 555 million, an increase of 51.87%, and a net profit of 9 million, an increase of 17.21%.
Viewpoint:
1. The capital construction leader of the western high-potential provinces, the listing accelerates the landing of the strategy of "four businesses and four industries", and makes a magnificent transformation from a road and bridge construction enterprise to an infrastructure integrated service provider.
Regional infrastructure leader, rich performance, significant technical barriers. Since its establishment in 1993, the company has formed a perfect road and bridge construction industry chain in Qinghai market, which is the most qualified and highest-grade road and bridge construction enterprise in the province, and has four first-class general contracting qualifications in the fields of highway, municipal, water conservancy and construction. Bridge, pavement, roadbed and tunnel four professional contracting first-class qualifications, a total of about 3000 kilometers of roads are under construction or completed, with an average elevation of more than 3000 meters above sea level. Strong engineering experience in permafrost, saline soil and other regional projects.
Through listing to realize the magnificent transformation from a road and bridge construction enterprise to an infrastructure integrated service provider. Since entering the capital market in 2016.9, the company has given full play to its advantages in listing, and has successively controlled Longdi Electric Power, Guizhou Water Conservancy and Golden Sunshine Construction through equity mergers and acquisitions, accelerating the landing of the strategy of "four businesses and four industries". The current business covers highway, railway, municipal, housing, water conservancy, electric power, energy and other fields, forming industrial synergy and improving the overall competitiveness of the whole field and the whole industry chain in the field of infrastructure construction. 2016.11 Zhengping Investment, a wholly-owned subsidiary, is responsible for leading investment projects in the field of infrastructure, so as to further expand the general contracting business of engineering construction, and obtain other comprehensive benefits except engineering construction and facility manufacturing in a variety of investment construction modes.
During the reporting period, the company set up wholly-owned subsidiaries to develop mining investment business, aiming to adjust and optimize the company's main business structure, expand the company's industrial scale, cultivate new profit growth points, and improve the company's profit level.
two。 Driven by the superposition of business synergies, the results of the three quarters continued to grow as expected.
The high performance growth is in line with expectations. The company's revenue in the first three quarters of 2018 was 1.695 billion / 51 million, an increase of 76% and 145%, respectively, compared with-43% in the first three quarters of 2017 and-30% in the whole of 2017. Among them, Q3 revenue / return to the mother increased by 52% and 17%, which is a marginal improvement compared with the 27% of Q2. We judge that the rapid growth of performance is mainly due to the understart of 2017 existing projects, the decline in income, the delay of some projects to the start of 2018Q1, and the release of catalytic Q3 performance one after another.
Business synergy appears, the abundance of orders will maintain rapid growth. As of 2018H1, the amount of new orders in the construction sector was 8.15 billion, an increase of 34%, accounting for 7.2 times the current income. The major projects that have won the bid include the Sanmenxia-Yuzhou section of the Sanyang Railway (the total investment is 10 billion, the winning part of the company is about 6.86 billion), the 580 million Chishui Bing'an Reservoir EPC project, the reconstruction project of the southwest Zhengzhou section of National Highway 316 million, etc.
3. The continuous sharp decrease in asset impairment losses has led to an increase in overall profitability, and a significant improvement in operating cash flow as a result of the rise and fall in the ratio of receipt and payment to cash flow.
The change in the scope of the merger led to a simultaneous decline in fees during the period of gross profit margin, and a significant reduction in asset impairment losses led to an increase in overall profitability. The gross profit margin during the reporting period was 10.40%, with a decrease of 2.16 pct. The sales / management / financial rates are 0.40% 4.21% 3.98% respectively, which is-0.03 / 0.32 /-0.22 pct respectively over the same period last year, mainly due to the change in the scope of the merger. The total rate for the period is 8.59%, with an increase of 0.07 pct. The loss of asset impairment-48.3 million is much lower than that of 4 million in the same period last year, mainly due to the fact that all the projects undertaken in the past three years are government-invested or authorized projects, and the risk of default is small. Therefore, the company does not have margin bad debt losses, and the large gap in the amount of provision for bad debts is not in line with the actual financial situation of the company, so the change in the method of provision for bad debts has been implemented since 2018.1.1, greatly reducing the impairment loss. As a result, the net interest rate increased by 3.74% by 1.06 pct.
The ratio of receipt, payment and cash has changed obviously, and the operating cash flow has improved significantly. During the reporting period, the cash-to-income ratio was 79.54%, with an increase of 21 pct, a significant increase, while cash payment was significantly lower than 93.01% by 39 pct. The net cash flow of operation and investment was-187 million /-74 million respectively, which was lower than that of-888 million /-180 million in the same period last year, while the net cash flow of fund-raising decreased significantly in 152 million compared with 523 million in the same period last year.
Conclusion:
During the reporting period, the company's revenue / homing increased by 76% and 145% respectively, with a rapid growth rate in line with expectations. The change in the scope of the merger led to a simultaneous decline in fees during the period of gross profit margin, and a significant reduction in asset impairment losses led to an increase in overall profitability. The change in the ratio of receipt, payment and cash has obviously led to a significant improvement in cash flow.
We believe that the company takes advantage of listing advantages to actively acquire and promote the "four businesses and four industries" strategy, the magnificent transformation from a road and bridge construction enterprise to an integrated infrastructure service provider, and the effect of business synergy enhancement has been reflected in business growth. At present, there are plenty of orders on hand, and the signing of nearly 10 billion large orders has greatly boosted business confidence.
The company's operating income from 2018 to 2020 is expected to be 2.234 billion yuan, 3.092 billion yuan and 4 billion yuan respectively, and earnings per share are 0.23,0.32 and 0.42 yuan respectively, corresponding to PE of 37.6X, 26.2X and 20.2X respectively, maintaining the "recommended" rating.
Risk hints: macroeconomic cycle fluctuation risk, raw material price fluctuation risk, performance seasonal fluctuation risk, force majeure risk