Recently, the company released its 2018 performance KuaiBao, with a total operating income of 1.139 billion yuan, an increase of 21.77% over the same period last year, and a net profit of 302 million yuan, an increase of 30.98% over the same period last year. The comments are as follows:
The growth rate for the whole year continued to grow rapidly but lower than expected, and the asset-liability ratio increased after mergers and acquisitions. The company's annual revenue growth rate was 21.77%, slightly higher than the 19.39% growth rate in the previous three quarters. Taking into account a small portion of Sinopec's combined income, the company's own revenue growth is expected to be the same as in the first three quarters. The company's operating profit grew by 19.63% for the whole year, basically the same as profit growth, but slightly lower than we expected, mainly because last year's expense rate did not decline significantly compared with 17 years and asset impairment increased. The net profit of home ownership increased by 30.98% for the whole year, and the reason why the growth rate was higher than the growth rate of operating profit may be due to the increase in non-operating income related to discount acquisitions or the decline in income tax rate, but the growth rate was slightly lower than expected. The company's asset-liability ratio increased from 35.67% at the beginning of 18 years to 49.54% at the end of the period, mainly due to the acquisition of Sinopec International, which has a higher asset-liability ratio.
Take the initiative to extend the business to other areas, after the acquisition of Zhongli International at the end of the year, the company extended its design business to other areas, and formally acquired Zhongli International, a survey and design institute in the coal industry, in December 18. Zhongli International is a traditional coal institute, which has rich technical reserves in underground space, which can provide technical support for the company to open up the rail transit market in the future, and it can also give great support to the company in its international business. infrastructure companies in the surrounding areas of foreign coal mines can take the opportunity to enter. With the recovery of the coal industry, the performance of Sinopec International has also begun to pick up, with a performance commitment of deducting non-return net profit of 22 million, 32 million, 42 million and 52 million from 2018 to 2021, and half of the transaction consideration is bound to interest through additional issues and purchases. we expect it to be easy to complete. Sinopec International completed the transfer of ownership on December 21, 18, and is expected to make a positive contribution to the company's future performance. In addition, recently, the company has set up two holding subsidiaries to enter the fields of civil construction and aviation, and invested in Liaoning Traffic Design Institute to expand the northeast market.
The number of infrastructure projects in Henan has increased by 74% year-on-year, and the demand for highways is still strong. Infrastructure investment in Henan, where the company is located, is expected to remain strong: according to the "Monitoring report on the Development trend of National fixed assets Investment in 2018 and the Investment situation Prospect in 2019" just released by the National Development and Reform Commission, the proposed projects in Henan have a year-on-year rapid growth of 74.9%, of which infrastructure projects increased by 74.0% year on year. In the government work report in Henan Province, only expressways are required to "implement the" Shuangqian Project "of expressways with an investment of more than 100 billion yuan and a total length of more than 1000 kilometers, and start construction of a number of projects such as Luanchuan-Lushi Expressway. Build three expressways from Zhoukou to Nanyang."
Investment suggestion
Although the company's performance is slightly lower than we expected, it is still growing at a high speed; at present, China International has merged the table, which is expected to produce synergy and improve the company's performance. Considering that the local market demand in Henan is still strong, the company is expected to maintain rapid growth, and the current valuation level is already very attractive. As the company has announced its performance in 2018, KuaiBao, and the share capital has changed accordingly, we have adjusted the company's EPS for 2018-2020 to 2.19,2.95,3.70 yuan per share (originally 2.56,3.43,4.32 yuan per share), corresponding to 17,12,10 times of PE, maintaining the "buy" rating and maintaining the target price unchanged.
Risk hint: the progress of the project is not as expected, and the lower international gross profit margin of Sinopec affects the overall gross profit margin of the company.