Main points of investment:
Event: according to the annual report released by the company in 2018, the company achieved operating income of 496 million yuan in 2018, an increase of 22.10% over the same period last year, and a net profit of 55 million yuan belonging to the shareholders of the parent company, an increase of 6.30% over the same period last year.
Q4 performance growth exceeded expectations, the annual growth rate increased significantly compared with the same period last year, and the profit and loss of new minority shareholders dragged down profit performance. The company's Q4 revenue / homing is 151 million / 14 million, an increase of 27% and 28% respectively, and the growth rate of homing in a single quarter is the highest since listing. The annual revenue / homing growth rate was 22% and 6%, of which the profit and loss of minority shareholders increased by 10.4 million, accounting for 15.92% of the net profit.
Gross profit margin / period rates rose synchronously, overall profitability improved slightly, and cash outflow narrowed significantly. During the reporting period, the company's gross profit margin was 39.45%, with an increase of 4.8pp, of which the gross profit margin of civil engineering / communications supervision was 32.35% and 39.86%, respectively, with an increase of 1.5pp/3.6pp, and a new increase in gross profit of electric power supervision business (gross profit margin 46.11%). The sales / management / financial rate is 2.36%, 14.34%, 0.68%, respectively, changing-0.7pp/2.6pp/0.6pp, with a total period rate of 17.38%, an increase of 2.5ppm, a net interest rate of 13.18%, an increase of 0.5ppm, and an operating cash flow of-2.76 million, significantly narrowing from the outflow of the previous year-37.64 million.
With the rapid growth and low concentration of the supervision market, the company took the lead in listing and accelerated the regional layout of the industry by virtue of capital and brand advantages, and launched an equity incentive plan to release business vitality. In 2017, the contract value of project supervision enterprises was 3963 billion YOY + 28%, of which the project supervision contract value was 1676 billion YOY + 20%; the revenue of project supervision enterprises was 3282 billion YOY + 22%, of which the project supervision business income was 1185 billion YOY + 7%; the industrial concentration was relatively low, and only 20 project supervision income exceeded 300 million. The company took the lead in going public in 2017 and acquired Hongmin Electric Power during the reporting period. It plans to grant 654000 restricted shares at a price of 8.19 yuan per share to 60 incentive targets, including core senior executives and technicians, and the market share is expected to continue to increase.
Deep ploughing South and East China region and communications and power engineering, China Mobile Limited won a big order, is expected to continue to benefit from the Greater Bay area / Yangtze River Delta integration / new infrastructure construction, large single landing will continue to release performance in the later stage. The company was founded in Guangdong and is currently making great efforts to expand the East China market. During the reporting period, South China / East China revenue accounted for 54% and 22% respectively, accounting for a total of 76%. It is expected to benefit from the implementation of relevant regional strategies to bring about the development of the construction industry. The company won the bid China Mobile Limited 2018-2019 communications engineering professional supervision service centralized procurement project, the framework contract value of 809 million, corresponding to 1.6 times the annual income, due to the 2018 investment slowdown and the project is in the initial stage, the development of this part of the business did not meet expectations. As of the end of the reporting period, the landing order / output value / collection progress accounted for only 13%, 11%, 1%. If the contract can be implemented normally in the future, it will provide a strong support for the company's communications supervision business and overall revenue growth.
Profit forecast and investment rating: from 2019 to 2021, the company's operating income is expected to be 625 million yuan, 755 million yuan and 886 million yuan respectively; the net profit is 70 million yuan, 87 million yuan and 106 million yuan respectively; the EPS is 0.51,0.64 yuan and 0.78 yuan respectively, and the corresponding PE is 35.9x, 28.8x and 23.6x respectively. Cover for the first time and give a "recommended" rating.
Risk tips: 1, project implementation is not as expected; 2, competitive risk; 3, financial risk