There are plenty of orders on hand, and orders are expected to continue to grow.
In 2018, the company won the contract amount of 8.204 billion, an increase of 8.91%, of which the amount of a single construction contract increased by 90.03%, while the amount of financing construction contract decreased by 100%. Thanks to the integration of the Yangtze River Delta and the infrastructure demand released by the Hangzhou Asian Games, orders are expected to continue to grow in the next few years. At present, the project under construction of the company has reached 22.805 billion yuan, which is 6.49 times the revenue in 2018. The company won the contract value of 259 million yuan in the first quarter of 2019, a large decline, or a high base due to the winning bid for Hangzhou Metro Line 7 construction project in the first quarter of 2018.
There is room for improvement in gross profit margin, and the transformation of income is expected to speed up.
In 2018, the company achieved operating income of 3.513 billion yuan, a decrease of 2.13%. Among them, the business income of the engineering construction sector increased by 1.38%, and the revenue from real estate development business decreased by 37.53%, or because the company no longer added new reserve plots after 2014. In 2018, the company's gross profit margin was 10.83%, with a decrease of 2.43%. Among them, the gross profit margin of the construction business increased by 0.12%, and the gross profit margin of the real estate development business decreased by 30.43%, which may be affected by the end of the project. It is expected that with the development of the integration of the Yangtze River Delta and the increase in infrastructure demand for the Hangzhou Asian Games, the company is expected to sign new PPP projects with high gross margins in the Yangtze River Delta region, raising gross profit margins, and order conversion revenue is expected to accelerate in 2019. In the first quarter of 2019, the company achieved operating income of 768 million yuan, an increase of 29.24%, a gross profit margin of 9.80%, a decrease of 1.55%, or the completion of the PPP project with high gross margin in 2018.
The expense rate has risen sharply over the 18-year period affected by trust products, and the first-quarter performance has reversed in line with expectations.
The company's expense rate for the period in 2018 was 12.4%, an increase of 7 percentage points, of which the sales expense rate and management expense rate were 0.3% and 3.4% respectively, which remained stable compared with the previous year; the financial expense rate was 4.6%, an increase of 3.5%, mainly because the company paid the priority income of the trust plan. The R & D expenditure rate was 4.07%, with an increase of 3.18%, mainly due to the company's large investment in construction method research in 2018. The company lost 93 million yuan in fair value changes in 2018, mainly due to the stock market downturn in 2018, the company's investment trust product Shaanxi Guotou Zhenghao 71 suffered a serious loss. In 2018, the company realized a net profit of 26 million yuan, a decrease of 90.56%. The stock market improved in the first quarter of 2019, and trust products increased the company's net profit by about 238 million; the main business net profit was about 62 million, and the net interest rate was about 8%. In the first quarter of 2019, the company achieved a net profit of 300 million yuan, with a substantial reversal in performance, in line with our expectations.
The cash-to-cash ratio is higher than the cash-to-cash ratio, and the average price of the actual controller is 2.89 yuan.
In 2018, the company's income-to-cash ratio was 1.14, an increase of 0.15 percent; the payment-to-cash ratio was 1.72, an increase of 0.72 percent, or an increase in project advances due to the increase in the number of projects started; and the net operating cash flow was 155 million yuan, with a decrease of 9.36 percent. From 2018 to the first quarter of 2019, the actual controller of the company accumulated an increase of 400 million yuan in market value stocks, with an average holding price of 2.89 yuan, accounting for 8.74% of the company's total share capital, demonstrating the company's confidence in the long-term development of the company in the future.
Investment suggestion
The integration of the Yangtze River Delta and the holding of the 2022 Asian Games in Hangzhou will release a lot of infrastructure demand, the company has obvious advantages in the Yangtze River Delta, orders are expected to continue to grow, and revenue transformation is expected to accelerate. According to the company's first-quarter results in 2019 and 2019, we maintain the company's forecast of 0.34,0.38 yuan per share in 2019-2020, with a forecast of 0.38 yuan per share in 2021, 8,7,7 times corresponding to PE, and maintain a "buy" rating and a target price of 3.73 yuan.
Risk hint: the progress of the project is not as expected; the return of the investment trust plan will fluctuate greatly with the stock market.
