In the fourth quarter, design orders remain on the ground at a high speed, and there are plenty of orders on hand:
The company signed new orders of 847 million yuan in the fourth quarter of 2018, an increase of 17.2% over 723 million yuan in the same period of 2017, of which engineering orders were 534 million yuan, down 10.1% from the same period last year. The design order is 313 million yuan, an increase of 142.6% over the same period last year. The design order with higher gross profit margin has greatly increased compared with the same period last year, which will help the company to improve its overall gross profit margin in the future. At the same time, it is expected that as the design order is converted to the construction order in the future, the company's construction order will usher in a faster growth. By the end of 2018, the company had signed unfinished orders totaling 4.152 billion yuan, including 2.389 billion yuan for construction business and 1.763 billion yuan for design business, with a total scale of 1.9 times the expected revenue in 2018.
Hotel design strength is outstanding, to create the core competitiveness:
In 2018, the company signed a total of 1.104 billion yuan in newly signed design business orders, an increase of 166.7 percent from 414 million yuan in the same period in 2017. The signing of a large number of design orders is mainly due to the continuous improvement of the influence of the Cheng ChungDesign (CCD) brand, and the continuous launch of works have been recognized by the market and customers, forming a good market image. In the 2013 Global Hotel Design Top 100 ranking by the American professional interior design magazine InteriorDesign, the company's hotel interior design comprehensive strength ranks third in the world. At the same time, Cheng Chung Design (CCD) brand has successfully expanded from the hotel field to residential, commercial and other areas, and has been recognized and recommended by a large number of customers. The revenue of the company's design business reached 193 million yuan in the first half of 2018, an increase of 30.37% over the same period last year. In the future, the company will continue to enhance its internal management capacity and efficiency, and further enhance the conversion ability of design orders.
Take advantage of the design first to vigorously promote the EPC model:
The company takes advantage of the design business to actively promote the undertaking and implementation of EPC projects. In the first half of 2018, it undertook a number of EPC projects, such as Continental Hotel in Xi'an, Angel Building, Dali Health Hotel and Sheraton Hotel in Zunyi. In the first half of 2018, the EPC project contributed 446 million yuan in income, accounting for 42.31% of the total revenue. The efficient operation of the EPC project, as well as good economic benefits for the owner and the wine management company, has won the company a good reputation and a market image with ATG and CCD as brands. In the future market expansion plan, the company will continue to optimize and adjust the implementation strategy around the EPC model to promote the development of the EPC model.
Financial forecasts and valuations:
From 2018 to 2020, we estimate that the company will achieve an operating income of 2.180 million yuan, an increase of 19.4%, 14.2%, and 1.72 million yuan, respectively, a year-on-year increase of 27.5%, 24.8%, 22.5%, and a corresponding EPS of 0.76, 0.95, 0.95, 1.17 yuan. The current stock price corresponds to 21.6-17.3 PE 14.1 times from 2018 to 2020. Considering the company's leading design strength, the EPC model develops smoothly and maintains the "recommended" rating.
Risk Tip: real estate cycle downward, payback risk.
