This report is read as follows:
Financing improvement + policy support will promote infrastructure to continue the upward trend, the company for Henan private infrastructure design leader will benefit, and the layout of the whole industry chain will be firmly promoted.
Main points of investment:
Maintain and increase holdings. The revenue / net profit of Q 1 of the company is about 256 million yuan (+ 35%) / 47 million yuan (+ 3.7%). We speculate that the growth rate of net profit is lower than expected or because of the lower profit margin of the merger mark, etc., we downgrade the forecast that the 20-year EPS will be 2.9pm 3.61 yuan (formerly 3.02 yuan 3.92 yuan) and the growth rate of EPS will be 4.33 yuan in 2021. Lower the target price to 44.33 yuan, and increase the holdings by 15.3 PE in 2019.
The net interest rate has decreased and the operating cash flow has improved. 1) the gross profit margin of 45.2% was basically unchanged in the same period last year, and the net profit rate was 18.2% (- 5.4pct) due to the increase of expense rate; 3) the expense rate during the period was 21.8% (+ 7.4pct), of which the sales expense rate was 2.8% (+ 0.8pct) / management expense rate was 16.1% (+ 4.8pct) due to the increase of consolidated table and R & D investment / financial expense rate of 2.9% (+ 1.8pct) due to the increase of interest expenses. 4) operating net cash flow-39.91 million yuan (- 89.78 million yuan in the same period last year) increased due to operating payback; 5) accounts receivable accounted for 42.5% of total assets (+ 8.9pct), asset-liability ratio 46.4% (+ 10.7pct).
Expand the main business and expand outside the province, as a regional design leader to benefit from the rebound of infrastructure. 1) the company's main business has expanded from transportation to the five pillars of transportation / municipal / construction / environment / energy, which can provide one-stop engineering and technical services; 2) the foundation of regional expansion is solid. The role of 6 regional operation centers outside the province and a number of overseas resident agencies is gradually emerging; 3) the increase of strategic partners (China Railway 14th Bureau, etc.) will achieve long-term win-win cooperation in the fields of investment, financing and project management. 4) R & D platform + information / digital steady progress, a substantial increase in the number of patents; 5) improved financing + policy support to promote the rebound of infrastructure, and Henan highway / municipal construction space is high, the company is the provincial design leader and will fully benefit; 6) the acquisition of Provincial Coal Institute to enhance underground rail traffic and other strength and the target 2019 all and show thickening performance.
Catalyst: rebound in infrastructure growth, continued loose liquidity, high order growth, etc.
Core risks: declining infrastructure growth, tight liquidity, lower-than-expected order execution, etc.