This report is read as follows:
Tight credit led to a lower-than-expected negative increase in the company's performance in 2018. With the central government's continued guidance to improve the financing environment of private enterprises and superimposed corporate performance to strengthen performance motivation, optimize internal management and strengthen equity financing, the performance in 2019 will be reversed.
Main points of investment:
Maintain and increase holdings. The company announced its 2018 results KuaiBao: revenue of 7.77 billion (- 5%) and return net profit of 300 million (- 60%) were lower than expected, and the company's EPS for 2018-2020 was 0.13x0.30xpx 0.48yuan (formerly 0.49pinch 0.67pence 0.87 yuan), with a growth rate of-60%. The target price was lowered to 5.60yuan (formerly 10.61yuan), corresponding to a multiple of PE on 43-19-12 from 2019 to 2020. Considering the improvement of the external financing environment and the hard constraints of state-owned equity investment on gambling performance, the company still grows well as the leader of ecological PPP and maintains an increase in holdings. The main reasons for the negative increase of the company's performance are the slow progress of the project caused by poor financing and the increase of financial costs, the increase of salary expenditure caused by the expansion of staff size and the provision of bad debts. 1) the poor financing of the company in the tight credit environment led to a slowdown in the progress of projects under construction, and revenue decreased by 5% compared with the same period last year. 2) the credit crunch led to an increase in financing costs and a significant increase in short-term borrowing. Financial expenses reached 529 million yuan in 2018, an increase of 76% over the same period last year. 3) the increase in staff size in 2017 led to a significant increase in management costs in 2018 (42% in the first three quarters of 2018) 4) the slowdown in payback leads to an increase in the provision of bad debts. Improvement of credit environment superimposed performance to optimize employee structure / speed up equity financing under hard gambling constraints, performance will be reversed in 2019 after bottoming. 1) the company has nearly 40 billion outstanding orders on hand, and the improvement of PPP policy and credit environment is conducive to speeding up the financing and landing rhythm of orders. 2) with the clearing of the performance in 2018, the introduction of state-owned investment (the major shareholders have transferred 5% of their shares, and the subsequent plan to transfer 5%) bet on the bottom line of performance in 2019-2021, 6.5%, 10.8 billion, 1.19 billion, with a growth rate of 11566. 10%. 3) optimizing the staff structure is conducive to reducing management costs, and the proposed issuance of 2 billion preferred shares is conducive to reducing financial costs; 4) the convertible bond conversion stock price is 3.99yuan / the introduction of state-owned investment price 3.76yuan / employee shareholding price (a total of 95.7538 million shares) is 8.09yuan, the current valuation is low.
Catalysts: the introduction of PPP regulations, the smooth issuance of preferred shares, the smooth conversion of convertible bonds into shares, and so on.
Risk hint: the policy continues to vigorously clean up and rectify PPP projects, financing interest rates sharply upward, and so on.
