Brief comment on performance
The company's revenue / return net profit in the first three quarters of 2018 was 43.2 million yuan, an increase of 23% and 44.5%.
Business analysis
Q3 revenue growth slowed and investment income boosted performance. 1) the company's revenue / return net profit in the first three quarters of 2018 was 43.02 billion yuan, an increase of 22.52% and 44.5%, which was basically in line with expectations. From a quarterly point of view, Q3 revenue growth and performance growth showed a decline, of which the revenue growth Q1/Q2/Q3 was 41% and the performance growth Q1/Q2/Q3 was 48% and 200% respectively. 2) the company's gross profit margin / net profit rate in the first three quarters of 2018 was 4.03% / 5.57%, and the gross profit margin / net profit rate changed from the same period last year-1pct/+0.77pct. The increase in net profit was mainly due to the substantial increase in investment income and non-operating income, both of which contributed 72 million yuan to the increase in pre-tax profit. 3) the net cash flow generated by the company's operating activities in the first three quarters was-435 million yuan, compared with-13 million yuan in the same period last year, mainly because the cash-to-cash ratio decreased from 18pct to 0.9, of which the net cash flow from Q3 operating activities reached-435 million yuan, compared with-13 million yuan in the same period last year. 4) the company's receivables / inventory increased by 31% / 19% to 18.4 billion yuan, accounts receivable turnover days / inventory turnover days were 0.5 days /-9 days to 99 days / 180 days, and the inventory acceptance was accelerated.
Housing design leader, business active vertical expansion, fund incentives to support the long-term direction. 1) the company is the leader of housing construction design, with 5.6 billion newly signed orders for H1 in 2018 (with an increase of nearly 40%), of which the design consulting contract is 3.2 billion yuan (15%) and the general contract is 2.4 billion yuan (97%). 2) the company is actively expanding vertically, and plans to set up Huajian Green Technology Development Co., Ltd. at the end of April to fill the gaps in the operation and technology side of the group; the PPP project with a total investment of nearly 6 billion yuan jointly won the bid in July. Equity investment infrastructure was set up in October, focusing on the real estate infrastructure industry chain focusing on consulting design, smart cities, green buildings and new materials, with investment opportunities in the fields of energy conservation and environmental protection, advanced manufacturing and state-owned enterprise reform. the estimated scale is not less than 600 million yuan. 3) the company ploughs the Shanghai area, where revenue accounts for about 50%. At the same time, it actively expands outside the province and actively participates in Xiongan New area planning and digital construction, Guangdong-Hong Kong-Macau Greater Bay Area and financial island planning and design projects. 4) through the equity incentive plan in May 2017, the incentive fund is based on the growth of the net profit of the current year, which is no more than 30% of the growth, and the incentive is sufficient.
Investment suggestion
The company is expected to return to its parent net profit of 365 million yuan in 2019, maintaining its overweight rating.
Risk
The gross profit margin of engineering business is declining, the business is concentrated in the region, and the national reform is not up to the expected risk.
