What happened: the company recently released its 2018 annual report. In 2018, the company achieved 2.508 billion yuan in revenue, an increase of 21.35% over the same period last year, realized a main business profit of 511 million yuan, an increase of 2.58% over the same period last year, and realized a net profit of 84.73 million yuan belonging to the parent company, down 13.44% from the same period last year. For the whole of last year, the company realized 4 cents of EPS and 3 cents of earnings per share after deducting non-recurring profit and loss. In the same period, the company realized 9 cents per share in operating cash.
Comments:
Revenue, profit, deducting non-profit growth and operating net cash are negative: the company's profit and loss after deducting non-recurring in 2018 was 62.46 million yuan, down 22.63% from the same period last year. The net cash generated by the company's operating activities was 166 million yuan, compared with-27.34 million yuan in the same period in 2017. The increase of 182 million yuan in operating cash over the previous period is mainly due to the increase in net cash flow from daily operating activities and the receipt of compensation funds for the Baoping River project of the Huangzangsi Water Control Project. The company's revenue grew by 21.35% in 2018, changing the situation of decline for four consecutive years from 2014 to 2017. Although the company's profitability is still unable to get rid of the decline, but the significant increase in income and operating cash flow indicates that the company is about to enter a stage of healthy development.
During the period, the expense rate decreased and the debt level increased: in terms of the three expenses, except for the increase in the financial expense rate, the management and sales expense rate decreased. Last year, the company's period expense rate was 16.6%, down 2 percentage points from 2016 and 2017, and down from 16.8% in 2015. In 2018, the company's financial expense rate was 5.2% the same as in 2017, and the financial expense rate has continued to increase since 2013. It shows that the company is under great financial pressure. At present, the company's debt ratio is 43.89%, higher than 40.79% in 2017, and is the second year to exceed 40%.
Poor operating efficiency and solvency: affected by market competition, the company's credit policy led to a decline in the turnover of accounts receivable from 2.57 at the end of 2017 to 2.27 in 2018.
But inventory turnover performance improved to 2.30 from 1.89 in 2017. Both the current ratio and the quick ratio performed poorly, at 1.27 and 0.99jue 2017, respectively, which were 1.82 and 1.33, respectively. But it's not a big problem for the company, and it's still within affordability. ROIC also fell to 2.90% from 2.94% in 2017, indicating increased pressure on the company's return on capital.
The company's future performance is flexible. Although the company has encountered many difficulties in recent years and is now under the pressure of market competition, we judge that the company's layout in hops, fruits, alfalfa and potatoes will blossom and bear fruit in the next few years. coupled with the characteristics of large price fluctuations of these cash crops, with the continuous optimization of the company's industrial structure and the improvement of the industrial level, the continuous improvement of internal management, the acceleration of market construction, and the improvement of anti-risk ability. In the context of the growth of corporate income and cash flow, especially in the context of public inflation, both performance improvement and market opportunities will be greatly improved.
Earnings forecast and investment rating: we expect the company's earnings per share from 2019 to 2021 to be 0.08, 0.09, 0.10 yuan, respectively. It is predicted that the PE in the next three years will be multiple of that in 42-39-33. Considering that the company has a good industrial foundation, reasonable layout, broad sales prospects and great potential. We maintain our "overweight" rating on the company.
Risk factors: weather disasters, adverse changes in relevant national agricultural policies, unfavorable consumption environment, intensified market competition, sluggish prices of agricultural products, and so on.