Events:
The company released its quarterly report for 2019. During the reporting period, the company achieved revenue of 750 million yuan, an increase of 32%, and a net profit of 73.35 million yuan, an increase of 0.2%. The newly signed order for 19Q1 is 1.98 billion yuan, which is the same as a decrease of 1.6%.
Comments:
The revenue end is released as scheduled, expenses and other periodic drag: the company's annual report for 18 years guidelines 19 annual income of 6.04 billion yuan, an increase of about 65%. 19Q1 revenue growth has accelerated, but it is still below the full-year guidance. We believe that due to the traditional off-season in the first quarter, the progress of the project has been delayed to a certain extent, and it is inferred that the follow-up revenue will continue to accelerate. The gross profit margin of 19Q1's main business is 20.7%, with an increase in 3.6pcts, indicating that its project profitability remains high. The three expenses (including R & D) are 7.0%, with the same increase of 3.5pcts, which periodically affects the profit margin. Compared with the same period of 18 years, the proportion of net investment income to income decreased 4.9pcts, mainly due to the decrease in income of its joint ventures and joint ventures (mainly Pudong Development Group Finance Company).
The company is an A-share scarce project management + investment and financing enterprise, characterized by the "three high" per capita output value, profit and salary. The company obtains excess returns by optimizing project management and shares long-term benefits by investing in selected infrastructure projects. With the arrival of the historical opportunity period of regional construction and the increase of high-quality projects, the company's business scale and profits will have greater flexibility. Recently, another case in which the company participated in the Pudong Science and Technology Fund for its investment.
ROE will have greater flexibility. It is recommended that the "buy" rating be maintained with the PB valuation as the anchor.
With the continuous promotion of the construction of Shanghai Free Trade New area and the integration of the Yangtze River Delta, the demand for regional construction will be gradually released. Pudong construction has a low asset-liability ratio and abundant cash on hand, which will usher in a period of historical opportunity. At present, its excess cash is not its means of production, and the equity multiplier is only 2x. In the future, with the increase of regional high-quality projects, both investment and main business are expected to achieve rapid growth, ROE will have greater flexibility. The company has guided a revenue growth rate of 60% in 19 years, indicating that it has entered a period of rapid development. The establishment of a Pudong Science and Technology Innovation Investment Fund is another case of optimizing the benefits of excess funds.
The company's revenue growth accelerated as scheduled, and the main gross profit margin remained high, but the expense rate and net investment income were under pressure periodically. Maintain the EPS forecast of 0.50,0.55,0.65 yuan from 2019 to 2021. Considering that with the construction of Shanghai Free Trade New area and the continuous promotion of the integration of the Yangtze River Delta, the company's ROE will be flexible, maintain the target price of 9.41 yuan, and maintain the "buy" rating.
Risk hint: gross profit margin is declining rapidly, regional investment is not as expected, and reinvestment risk
