Operating income has declined for the whole year, and it is expected to improve in the future.
The company achieved operating income of 178 million in 2016, a decrease of 35.88%, of which geotechnical engineering income and exploration business income decreased by 45.60% and 24.18%, respectively. The operating income of the first quarter of 17 years was 32.1587 million, and 2.04%. The decline in performance may be related to the sharp decline in fixed asset investment in the petrochemical industry where the company is located.
However, there has been a recovery in the petrochemical industry recently, and at the same time, the company has made efforts to strengthen its operation and open up new market areas. so far this year, it has signed about 200 million yuan of major projects that have won the bid, and its business income is expected to improve in the future.
The company's 2016 gross profit margin excluding the impact of operating reform was 19.06%, a decrease of 11.91 percentage points compared with the same period last year, which may be related to the fact that the decline in operating costs is less than that in operating income.
During the period, the expense rate increases, and the net profit in the first half of the year is expected to turn from loss to profit.
The expense rates during the first quarter of 16 and 17 were 20.47% and 37.81% respectively, an increase of 2.12 and 16.53 percentage points over the same period last year. Among them, the 16-year sales expense rate was 3.79%, an increase of 1.55% over last year, mainly due to the decline in the company's performance but the increase in sales expenses; the management expense rate was 18.55%, an increase of 2.02% over last year, and the management fee was relatively rigid; the financial expense rate was-1.87%, an increase of 1.45% over the same period last year, mainly from interest income from raised funds. The asset impairment loss in 2016 was-3.86 million yuan, from positive to negative, due to a substantial reduction in the company's loss on bad debts. The net profit in 2016 was 4.6 million, down 75.61% from the same period last year. In the first quarter of 2017, the net profit was-3.97 million, which was 1.33 million yuan less than the loss in the same period last year. The order situation in the first half of 2017 improved compared with the same period last year, and the company expects the net profit in the first half of 17 years to turn into profit compared with the same period last year, with a net profit of 20-4 million yuan.
In the past 16 years, the operating cash flow was sufficient, and the cash-to-cash ratio increased and the cash-to-cash ratio decreased.
The 16-year income-to-cash ratio was 1.17, an increase of 16.37% over last year, and a decrease of 12.65% over last year. The increase in cash-to-cash ratio may be related to the recovery of 6.7166 million yuan of provision for bad debts in the current period. Taken together, the operating cash flow in 16 years is 16.73 million yuan, changing from negative to positive. The operating cash flow in the first quarter of 17 years was-42.49 million yuan.
Increase the intensity of operation and actively transform mergers and acquisitions
Under the influence of the industry, the company's main customers lack of investment, and the market competition is extremely fierce. On the one hand, the company strengthens its research and development efforts to maintain the leading edge of its main business; at the same time, it actively taps the business opportunities of highway, municipal, railway and other industries, and plans to acquire Tianjin Sino-German to strengthen business transformation and open up new market areas.
Investment suggestion
There are signs of recovery in the company's industry, orders are expected to increase in the first half of the year compared with the same period last year, and future operating revenue and profits are improving. The company actively explores business opportunities in related industries and intends to acquire Tianjin Sino-German to strengthen business transformation. To sum up, the company's operating situation continues to improve, and the operating inflection point has appeared. We estimate that the EPS in 2017-2019 is 0.18,0.32,0.42 yuan per share, and the corresponding PE is 204,115,88 times. The company is covered for the first time and gives the company a "buy" rating.
Risk hint: the growth rate of investment in the industry continues to decline, and mergers and acquisitions put forward higher requirements for corporate management.
