The company recently released its semi-annual report for 2019, with revenue of 155 million yuan during the reporting period, down 3.36% from the same period last year, and net profit of 12.66 million yuan, up 5.83% from the same period last year. The comments are as follows:
The growth rate of revenue in a single quarter became positive, and the greenhouse boutique project increased the gross profit margin by 300 million yuan in the first half of the year, an increase of 167.46% over the same period last year. The number of contracts was 12, which was also a substantial increase over the same period last year. Among them, a 250 million-scale river regulation project PPP contract was signed in Ya'an City, Sichuan Province in the first half of the year. The company's kaleidoscope project at the Expo will bring continuous and positive advertising effect to the company and bring certain convenience to new orders in the future. The company's operating revenue fell 3.36% in the first half of the year compared with the same period last year, in line with the previous performance expectations of KuaiBao. The growth rate in the second quarter has rebounded to 7.01% (- 27.70% in the first quarter), and the growth rate is expected to pick up in the future. The gross profit margin in the first half of the year was 23.67%, up 3.53 percentage points over the same period last year. The company combines its own advantages of greenhouse landscape to undertake boutique projects, and the gross profit margin is expected to be maintained.
The expense rate has increased a lot, and the asset impairment loss has been reversed.
The company's expense rate during the first half of the year was 19.41%, an increase of 5.31 percentage points over the same period last year. Among them, the rate of sales expenses is 1.25%, which is basically the same as that of the same period last year; the rate of management expenses is 17.62%, an increase of 2.65% over the same period last year, mainly due to certain personnel costs caused by the ecological acquisition of subsidiary Nanjing; the rate of financial expenses is 0.14%, an increase of 2.23% over the same period last year, which has something to do with the current financing environment; and R & D expenses have not changed much compared with last year. Some of the bad debts have been reversed in the current period, and the asset impairment loss is-8.4 million. Taken together, the net profit of returning home in the first half of the year was 12.66 million yuan, an increase of 5.83% over the same period last year. Taking into account factors such as the reversal of bad debts after the recent write-off of microfinance companies, the low base caused by large amounts in the second half of last year, and the rebound in revenue growth, we expect the company's profits to return to 17-year levels.
The asset-liability ratio continues to decline, and the proposed strategic investment by state assets is expected to open up more areas. the cash-to-income ratio for the first half of the year is 1.0121, down 37.31 percent from the same period last year, and the cash-to-payment ratio is 0.8910, down 83.61 percent from the same period last year. The cash-to-cash ratio has returned to a relatively normal level. Taken together, the net cash flow of operation is 57.01 million yuan. The company's current asset-liability ratio continues to decline, falling 0.40 percentage points in the second quarter from the first quarter to 42.24%.
The company currently announces the signing of a cooperation framework agreement with China Development Venture Capital. The controlling shareholder of China Development Venture Capital is Zhongguancun Development Group Co., Ltd., which is controlled by Beijing SASAC. In the future, the two sides will carry out strategic cooperation in the areas of strategic shareholding companies, the construction of innovative demonstration zones, great health and environmental protection. With the help of this platform, the company is expected to begin to explore new areas.
Investment suggestion
The company's semi-annual report results are basically in line with previous expectations, the company is expected to continue to increase revenue growth in the second half of the year, profits will also return to the 17-year level. Signing a cooperation framework agreement with China Development Venture Capital will provide more possibilities for the future. We maintain the forecast of 0.20,0.24,0.30 yuan per share from 2019 to 2021, corresponding to the current PE of 24,19,16 times, maintain the target price of 6.40 yuan, and maintain the "overweight" rating.
Risk tips: the accelerated decline in the growth rate of fixed asset investment, the intensification of inter-industry competition, the risk of industry payback, and the delayed landing of cooperation framework agreements.