This report is read as follows:
The company's net profit grew by 196% in the first three quarters; the upstream design capacity was enhanced through epitaxial mergers and acquisitions of Millennium Design, the layout of the whole industry chain was improving day by day, and the diversified business was firmly promoted.
Main points of investment:
Maintain and increase holdings. The company's January-September net profit of 190 million yuan (+ 196%) is in line with expectations; considering the decline in infrastructure growth, the forecast company's EPS in 2018 will be reduced to 0.27 won (formerly 0.33 won), with a growth rate of 45%. It is predicted that the company's EPS will be 0.57 yuan in 2020, with a growth rate of 40%. Considering the downward shift of the construction valuation center and referring to comparable companies, the company will be given 20.5 times PE in 2018, and the target price will be reduced to 5.54 yuan to increase holdings.
The gross / net interest rate rose and the operating cash flow was under pressure. 1) Q1-Q3 's single-quarter net profit is 0.37 + 0.62 Q1-Q3, with a growth rate of 3058; 156; 117%; 2) gross / net profit 14.2% (+ 1.7pct) / 8.4% (+ 4.6pct); 3) operating net cash flow of-110 million yuan (9.45 million yuan in the same period last year), with a cash-to-cash ratio of 85% (+ 9.4pct) / 87% (+ 10.9pct) 4) the expense rate during the period is 6.8% (- 0.8pct), of which the management expense rate is 3.4% (- 0.7pct) and the financial expense rate is 3.2% (- 0.3pct); 5) the asset-liability ratio is 48.8% (+ 0.8%), the ratio of accounts receivable to total assets is 16.2% (+ 3.9pct), and the proportion of asset impairment loss is 0.56% (+ 0.26pct).
The completion of the acquisition of Millennium Design, the prospect of performance growth is worth looking forward to. 1) according to the announcement of the company, it has completed the acquisition of Millennium Design, issued 102 million additional shares to its shareholders at 8.57 yuan per share (former reinstatement right) and paid 548 million yuan in cash to acquire 88.23% of its shares, which will strengthen the upstream design capacity and order expansion ability. and the performance will be thickened. 2) the "National seawall Construction Plan" proposes to strive to increase the national seawall length of 15000 km / built seawall to 57.1% in 10 years, and the company will fully benefit; 3) firmly promote the layout of business outside the province. At present, it has won the bid for 900 million yuan to introduce the Jianghuai project; 4) focus on building the three major business sectors of construction and development / characteristic literature and tourism / environmental protection science and technology.
Catalyst: the growth rate of infrastructure stabilizes and picks up, the execution of orders on the ground is accelerated, and so on.
Risk tips: project expansion and landing are not as expected, accounts receivable risk, etc.
