This report is read as follows:
The company pays close attention to the main industries of large water conservancy and other projects, and enhances the upstream design capacity through epitaxial mergers and acquisitions of Millennium Design, which will benefit from financing to improve the rebound of infrastructure; and actively layout environmental protection technology and cultural and tourism innovation, which is expected to continue the high growth trend in the future.
Main points of investment:
Maintain and increase holdings. The company's 2018/2019Q1 net profit of about 250 million yuan (+ 19%) / 29 million yuan (- 22%) is lower than expected. We speculate that due to the credit crunch / PPP regulation / infrastructure growth decline in 2018 (2019Q1 also slows down due to the increase of Rain Water weather, etc.) Downgrade the forecast for 2019 EPS to 0.33 EPS 0.43 yuan (formerly 0.39 cusp 0.53 yuan) with a growth rate of 50% (high growth factors combined with tables, etc.), forecast a 25% growth rate of 0.54 yuan in 2021, maintain the target price of 6.24 yuan, and increase holdings by 18.9 PE in 2019.
The gross / net interest rate decreased slightly and the operating cash flow was stable. 1) in 2018, the net profit in the single quarter was 0.37 1.4pct 0.62 Celsius 0.86 / 67 million yuan, the growth rate was 3058pm 156According to the negative growth rate of Q4, or due to the impact of tight credit and declining growth in infrastructure, 2019Q1 has stabilized. 2) the gross profit margin is 15.6% (- 1.4pct) due to the decline in gross profit margin of seawall projects with high business proportion (12.1%/-9.5pct), etc., net profit margin is 7.4% (- 0.2pct). 3) the three-rate 7.6% (+ 1.6pct), the management expense rate 4.4% (+ 0.9pct) due to the increase in the consolidation range / the financial expense rate 3.1% (+ 0.6pct); 4) the net operating cash flow of 74 million yuan (- 7.3%) is basically stable; 5) the asset-liability ratio of 50.3% (+ 0.3pct) is basically stable; accounts receivable is 18% (+ 4.1pct) due to the increase in the scope of the consolidated table.
Solid promotion of diversified business layout, performance growth prospects are worth looking forward to. 1) the company locates the ecological governance solution provider, extends the upstream and downstream industrial chain of the main industry + speeds up the development of culture, tourism and cultural and creative plates; 2) the strong support for infrastructure such as the improvement of financing and the integration of the Yangtze River Delta will promote the rebound of capital construction. The company has regional advantages in ploughing Jiang and Zhejiang and benefits from the "National seawall Construction Plan" for seawall construction leaders. 3) undertake construction bid business 2.1 billion + win bid PPP about 4.1 billion (guarantee multiple 1.8 times) in 2018, actively arrange projects outside the province, such as diversion of Jianghuai and Anhui section projects, etc.; 4) plan to issue no more than 700 million yuan of green bonds + total bank credit line of 11 billion yuan + 1.5 billion of currency funds on hand at the end of Q1, which will ensure the smooth progress of the business. 5) the acquisition of about 89% equity of Millennium Design has been completed (8.57 yuan / controlling shareholder lock for three years / 8.5% of the ban was lifted in June 2019), which will strengthen upstream design capacity and thicken performance.
Catalyst: the growth rate of infrastructure stabilizes and picks up, the execution of orders on the ground is accelerated, and so on.
Risk tips: project expansion and landing are not as expected, accounts receivable risk, etc.