Based on garden construction, enter the "ecological +" market. The company is one of the high-quality landscape enterprises in Jiangsu Province, its predecessor was founded in 2003, completed the share reform in 2011 and listed in 2016, mainly engaged in road greening, landscape engineering design, construction and maintenance and other business. the focus of business has shifted from traditional real estate gardens to municipal gardens and ecological landscape gardens, while expanding to municipal engineering, river and lake renovation, ecological management, sports, culture, tourism and other areas of core business. After the listing of the company, the business undertaking scale, revenue scale and net profit scale continued to grow, with revenue of 1.037 billion yuan in 2017, an increase of 102.94% over the same period last year. The proportion of the main engineering business was stable, all above 80% in the past five years. Based on the East China market, the company continues to increase its market share outside East China. The proportion of revenue outside East China increased from 27.5% in 2013 to 67.15% in 2017, and its revenue CAGR reached 45.05%, far exceeding the company's total revenue CAGR16.03%.
There is a broad demand for the integration of culture and tourism in the strategic space for the construction of ecological civilization. Since the concept of "Beautiful China" was put forward in 2012, the strategy of ecological civilization construction has been continuously improved. Against the background of a downward trend in the growth rate of fixed asset investment and infrastructure investment in 2018, the growth rate of investment in the ecological and environmental protection industry has risen against the trend and maintained rapid growth. The proposal of the 13th five-year Plan calls for speeding up ecological restoration, and the investment in ecological gardens is expected to continue to increase in the future, from landscape expansion to water ecological construction, or to other areas of environmental protection and tourism. At the same time, the combination of gardens and PPP is good, the investment of ecological construction and environmental protection PPP projects has reached a new high, the proportion of PPP projects in the garden plate is high, and the project quality is fully guaranteed. At present, the construction of characteristic towns and beautiful villages has received a number of policy assistance, which has become a key area under the strategy of ecological civilization construction, and has a broad market space.
Profitability is expected to improve, and high business growth leads to increased leverage. The company's homing net profit maintained a steady growth trend, with a net profit of 171 million yuan in 2017, a year-on-year growth rate of 137.23%, higher than the revenue growth rate. The company's net profit margin increased, from 9.96 per cent in 2013 to 18.31 per cent (weighted) in 2017, falling from 23.08 per cent to 12.86 per cent in 2013-2016 to 18.78 per cent in 2017. Due to the increase in engineering volume, the company increased bank loans in 2018, which is the main component of liabilities, and the company's asset-liability ratio gradually increased, reaching 65.07% at the end of 2018Q3. The level of inventory management of the company has improved, and the proportion of inventory has dropped to less than 30%. Compared with the other three comparable competitors in East China, Dongzhu Ecology, Daqian Ecology and Meishang Ecology, the company's business scope is more comprehensive, the scale of revenue and profit and the year-on-year growth rate are in the middle level, and the growth rate of net profit is in the upstream level. the newly signed contract ranked first in 2018, second only to Dongzhu Ecology.
Epitaxial mergers and acquisitions to expand the industrial chain, PPP volume orders are sufficient. In 2017, the company successively completed the acquisition of 80% of Zhongwei International and 60% of Zhengzhou Water, cultivating new business growth points in the municipal and water conservancy fields, while enhancing the company's strength in the design field and expanding to the front end of the industrial chain. Since 2017, according to the strategic concept of "ecology + literature travel" and "ecology + style", the company has continuously promoted the deep integration of ecological construction, cultural tourism and sports industry, and has undertaken high-quality PPP projects related to culture and culture. By the end of December 2018, the company has signed three formal contracts for PPP projects, with a total investment of 12.754 billion yuan. The amount of newly signed contracts in 2018 was 5.234 billion yuan, an increase of 97.97% over the same period last year, which is about 5 times the total revenue in 2017. the company has a strong ability to undertake business, and sufficient orders enhance the company's performance flexibility.
Investment advice: high growth performance, maintain the "overweight-A" rating.
The company is based on ecological garden construction, actively layout style, literature and travel market, while expanding the length of the industrial chain to add water conservancy projects and design business, the company's order income is relatively high, the flexibility of performance growth is expected to be with the help of the "PPP" model, benefit from ecological civilization construction policy dividend, market share is expected to continue to grow. It is estimated that from 2018 to 2020, the company's income growth rate is 30.9%, 29.2% and 25% respectively, and the net profit growth rate is 5.5%, 36.8% and 29.9% respectively. The corresponding EPS is 0.53,0.72 and 0.94 yuan respectively, and the corresponding dynamic PE is 18.1,13.2 and 10.2 respectively. We are optimistic about the company, we are optimistic about the future growth of the company, maintain the investment rating of-A, and forecast the company's six-month target price of 12.4 yuan, which is equivalent to the valuation of 17 times expected earnings in 2019.
Risk Tips:
Risks such as PPP policy changes, upward interest rates, high receivables and poor performance.
