Events:
The company released its 19 semi-annual report. During the reporting period, the company realized operating income of 1.87 billion yuan, an increase of 48%, a net profit of 160 million yuan, a decrease of 3%, and a net profit of 110 million yuan, an increase of 9%.
Half-yearly report results growth is lower than expected.
The trend is getting better, which is a non-recurrent drag.
The growth rate of income is the best in five years, and the annual report for 18 years indicates that income for the whole of 19 years will grow by 65%. It is expected that 19H2 revenue will further accelerate. During the reporting period, the company signed a new order of 4.2 billion yuan, with an increase of 52% in July-August, and the company's newly signed order reached 2 billion yuan. With the planning and landing of the new area of Shanghai Free Trade New area, the prosperity of regional investment has improved. Shanghai will set up a special development fund for the new area, with a funding scale of 100 billion over five years, to support the construction of high-end talents and infrastructure in the new area. If the capital ratio of infrastructure projects in the new area is 25%, the maximum regional investment of the special development fund is about 400 billion yuan. Pudong Construction, as an engineering platform under the State-owned assets Supervision and Administration Commission of Pudong New area, may benefit; compared with the potential scale of regional investment, its income of 3.6 billion in 18 years also means that there is more room for the future.
Expenses and non-recurring gains and losses are a periodic drag on performance. During the reporting period, the company's comprehensive gross profit margin was about 11%, with an increase of 1.9 pcts; the expense rate during the period was 6.74%, with an increase of 2.5 pcts; fluctuations in structural deposits led to a corresponding decrease in investment income. The company's operating cash flow has a net inflow of 23.62 million yuan, compared with-25.71 million yuan in the same period last year. The company's net cash is about 5 billion yuan, which is sufficient to support future performance growth.
Income, orders are good, benefit from regional investment, maintain "buy" rating company is A-share scarce project management + investment and financing enterprises, characterized by the per capita output value, profit, salary "three high". The company obtains excess returns by optimizing project management and shares long-term benefits by investing in selected infrastructure projects. 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'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 tips: regional investment is lower than expected, non-recurrent profit and loss fluctuations
