The company's 2018 and 2019Q1 forecast growth has declined, and the slowdown in financing is the most important reason for the company's performance. With the improvement of social integration and the strengthening of risk control within the company, we believe that with the improvement of social integration, there will be a wave of valuation repair in the garden sector, and the company's performance will probably bottom out in 2019.
Support the main points of rating
The deterioration of the financing environment and cash outflow put greater pressure on the company's operation: the company's 2018 revenue was 7.766 billion yuan, down 5.15%; the net profit returned to its mother was 302 million yuan, down 60.14%; and the estimated loss in the first quarter was 9000-95 million yuan, with a decrease of 24.37% and 31.27%. The fluctuation of the company's cash flow increased, of which 2018Q2-Q3 raised cash outflow of 1.309 billion yuan, investment cash outflow of 1.94 billion yuan, the company's projects urgently need more cash flow to cover the bottom, financing and investment cash outflow caused greater pressure on the company's operation.
The company has abundant orders on hand, and there is no worry about the growth of capital performance: as of 2018Q3, the company has ordered 48.439 billion yuan, and the order-to-income ratio has reached an all-time high of 4.96. As long as the funds are in place, there will be great certainty that the company's performance growth will be restored. In the future, the company will further strengthen its control over project payback and performance quality.
The improvement of social finance drives market sentiment, and the valuation of the company is expected to take the lead in repairing: 2019Q1 social finance data is significantly improved, the valuation level of the garden sector is closely related to the growth rate of social finance in history, and the garden sector can often walk out of an independent market with the improvement of the financing environment. As the industry leader, the company is expected to take the lead in repairing the valuation under the improvement of market sentiment.
With the deep investment control strategy, the preferred stock issue is expected to improve the financial situation: the company introduces the deep investment control strategy at the end of 2018, and the operating condition is expected to improve under the endorsement of state-owned shareholders. The company will issue 1.87 billion yuan of preferred shares in 2019, and it is expected that the financial situation of the company and major shareholders will improve after the issue.
Valuation
Due to the decline in performance in 2018, the company's profit forecast is lowered. It is estimated that from 2018 to 2020, the company's revenue will be 77.82 yuan, 110.91 yuan and 14.045 billion yuan respectively; the return net profit will be 3.02 yuan, 7.22 yuan and 1.052 billion yuan respectively; and the EPS will be 0.129 yuan, 0.308 yuan and 0.449 yuan respectively. Considering that there is a strong change in the company's fundamentals in 2019, the most difficult time has passed, and the stock price is more likely to rise in the future to maintain the company's overweight rating.
Main risks faced by rating
PPP project policy tightened, preferred stock financing failed to land, macro policy turned.
