Event: the company released its annual report for 2018, with annual revenue of 2.726 billion, an increase of 37.15%, a net profit of-491 million, an increase of 2.38%, and a deduction of 17 million, an increase of-4.56%.
Higher material prices and new signings lead to lower gross profit margin / net profit margin. The cash flow of receipt and payment is higher than this, and the operating cash flow is positive to negative. The debt ratio is rising. The company's annual gross profit margin is 1.52% (- 3.4pp), mainly due to (1) a substantial increase in the price of cement, sand and other materials caused by environmental protection restrictions during the year, (2) a substantial reduction of 1.1 billion of newly signed orders, and (3) an increase in the comprehensive consumption of cement and other materials in the Guangji Expressway Project under construction. Sales / management / finance / period rates are 0 (-) / 2.94% (- 0.8pp) / 0.55% (- 0.4pp) / 3.49% (- 1.2pp); impairment-5 million (- 111%) is judged to be a reduction in receivables and a return to part of the provision for bad debts, accounting for 24% of net profit; tax rate 35.8% (- 13pp); net interest rate 0.77% (- 0.4pp) The cash-to-cash ratio is 97.32% (- 3.5pp) / 97.53% (+ 6.7pp), and the operating cash flow is-43 million minus 269 million, which is due to the increase in project payment; the debt ratio is 54.4% (+ 2.2pp).
According to its promotion of key projects to drive income growth, the decline in profitability led to a decline in profits. The annual revenue / return to the mother increased by 37.15% (+ 41pp) /-4.91% (+ 44pp), and the revenue growth was faster than that in the previous year. During the reporting period, key projects such as Yakang Expressway and Wenma Expressway were promoted on schedule, while the revenue base in the previous year was relatively small. The net interest rate decreased due to the decline in the above-mentioned reasons.
Deep ploughing high potential market, competitiveness and on-hand orders are considerable, the largest single project loan contract has been landed. Successfully completed the re-election of senior executives and the transfer of control. Be optimistic about late order recovery and profit repair. Sichuan is the key region to make up for the shortcomings and the key town to get rid of poverty. The growth rate of the output value of the construction industry in 2015-2017 is 8.7%, 13.6% and 14.5% respectively. The highway investment of 142.1 billion (+ 13.2%) in 2018.1-11 is second only to Yungui, and will reach 1400-150 billion yuan in 2019. Chengdu is located in the western center and transportation hub, and its construction will be accelerated in 2019. The total investment of key projects to be implemented for the whole year is 3.4 trillion, and the annual investment is 480.5 billion, of which the annual investment of provincial key projects is 168.8 billion. The company has the first-class qualification of highway / municipal construction general contractor and a number of professional first-class qualifications such as bridges and tunnels, and is one of the few contractors with the widest range of business qualifications in the province. During the reporting period, the provincial income was 2.245 billion, accounting for 82% (+ 10pp). During the reporting period, the transfer of control and the re-election of Dong Jiangao were successfully completed, and the operation continued to be on the right track. The newly signed orders of Q1-Q4 are respectively 800 million 240 million / 0, showing signs of recovery. At the end of the period, 4.3 billion orders are on hand, corresponding to 1.6 times the current income. During the year, the 1.8 billion yuan loan contract for the Dazhou-Xuanhan expressway PPP project was landed and a total withdrawal of 270 million yuan was completed. At the same time, the company's follow-up project has taken into account the rising price of materials in the bid quotation, and is expected to gradually achieve profit repair.
Profit forecast and investment rating: from 2019 to 2021, the company's operating income is expected to be 3.779 billion yuan, 4.735 billion yuan and 5.237 billion yuan respectively; the net profit is 32 million yuan, 42 million yuan and 47 million yuan respectively; the EPS is 0.04,0.05 yuan and 0.06 yuan respectively, and the corresponding PE is 144x, 110x and 98x respectively. Cover for the first time, giving a "neutral" rating.
Risk tips: 1, macroeconomic risk; 2, market competition risk; 3, material price risk.