This report is read as follows:
The company pays close attention to the main industries of large water conservancy and other projects, and enhances the upstream design capacity through epitaxial mergers and acquisitions of Millennium Design, which will benefit from financing to improve the rebound of infrastructure; and actively layout environmental protection technology and cultural and tourism innovation, which is expected to continue the high growth trend in the future.
Main points of investment:
Maintain and increase holdings. The company announced the 2018 results KuaiBao, revenue of about 3.56 billion yuan (+ 24%) / net profit of about 270 million yuan (+ 27%) slightly lower expectations, we speculate that PPP regulation / infrastructure growth decline and other factors drag down business growth, downgrading the forecast for 2018-19-20 EPS to 0.24max 0.39exp 0.53 yuan (formerly 0.27mm0.4max 0.57 yuan), a growth rate of 2765max 35% Considering the recent risk appetite rise / construction valuation repair and referring to comparable companies in the same industry, the company will be given 16 times PE in 2019, raising the target price to 6.24 yuan and increasing its holdings.
Q4 performance growth slowed down, financing improvement + infrastructure rebound is good for the company's main project strength. 1) the net profit of Q1-Q4 per quarter is 0.37, 0.62, 0.86, 000. We believe that the year before and after the high and high Q4 slowdown is mainly due to PPP regulation / credit tightening / infrastructure growth decline, affecting the construction progress and revenue recognition of some of the company's projects. 2) the strong policy support for infrastructure such as financing improvement and the integration of the Yangtze River Delta will continue to promote the growth of infrastructure, and the "National seawall Construction Plan" proposes to strive to increase the national seawall length of 15000 km/ to 57.1% in 10 years, and the company will fully benefit from being the leader in the field. 3) the company intends to issue no more than 700 million yuan of green bonds for project construction / replenishment / repayment of loans from financial institutions in the field of green industry.
Solid promotion of diversified business layout, performance growth prospects are worth looking forward to. 1) focus on building the three major business sectors of construction and development / characteristic literature and tourism / environmental protection technology; 2) have completed the acquisition of 88.23% of the equity of Millennium Design (8.57 yuan / controlling shareholder lock for three years + 8.5% of the ban was lifted in June 2019). Will strengthen upstream design capacity and will increase performance 3) the business of culture and tourism, such as car town / cultural creation, such as film and television special effects, is firmly promoted, and is expected to form a new growth point in the future; 4) actively lay out the market outside the province.
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.