The company recently announced that its revenue in the first three quarters of 2019 was 1.639 billion yuan, an increase of 217.99 percent over the same period last year, while the net profit belonging to shareholders of listed companies was about 44 million yuan, an increase of 224.20 percent over the same period last year. The comments are as follows:

Newly signed orders continue to grow, with plenty of orders on hand

In the first three quarters of 2019, the company's engineering business won the bid amount of 6.971 billion yuan, an increase of 173.59% over the same period last year.

Beit Jian'an construction orders continued to grow steadily, with an increase of 177.41% over the same period last year. As of September 30, the total amount of unfinished orders signed was about 9.16 billion yuan, and the 18-year income ratio of in-hand orders was 9.6 times. Recently, Chengdu High-tech Zone has launched a Sino-Japanese industrial park and honeycomb interconnection project, which has accelerated the development of the high-tech industrial zone. Shareholder advantage provides support for the company's newly signed orders, and the adequacy of on-hand orders promotes the improvement of performance.

A substantial increase in revenue from the engineering business and a decrease in the proportion of the futures business led to a decline in the comprehensive gross profit margin in the first three quarters of 2019. The company achieved operating income of 1.639 billion yuan in the first three quarters of 2019, an increase of 217.99% over the same period last year, mainly due to the completion of a large number of existing orders in the previous period and the increase in revenue from the construction business. In the first three quarters, the company's comprehensive gross profit margin was 12.72%, down 8.55 percentage points from the same period last year, or due to the substantial increase in the company's engineering business, the proportion of high gross margin futures brokerage business declined.

As a result of the scale effect, the expense rate continued to decline, and the return net profit maintained a rapid growth in the first three quarters of the company's expense rate of 8.44%, down 7.93 percentage points from the same period last year. Among them, the sales expense rate was 5.16%, down 10.75% from the same period last year, and the company scale effect continued to play a role; the management expense rate was 3.66%, down 3.35% from the same period last year, mainly due to the rigidity of management expenses and the decrease in scale effect; the financial expense rate was-0.38%, up 6.16% from the same period last year, mainly due to the increase in funds needed for the company's business investment and the increase in interest expenses. The company did not collect R & D expenses. Taken together, the net profit of returning home in the first three quarters was 44 million yuan, an increase of 224.20% over the same period last year.

Operating cash flow has increased significantly, and additional shares have contributed to the future development company's cash-to-cash ratio of 0.6122 in the first three quarters, down 34.85 percent from the same period last year, or because more newly signed orders are in the construction period; the cash-to-cash ratio is 0.5853, which does not change much from the same period last year. The net cash flow of operating activities was 76 million yuan, an increase of 171 million yuan over the same period last year, mainly due to the increase in margin received by clients in the current period.

During the reporting period, the non-public offering of shares was approved by Chengdu State-owned assets Supervision and Administration Committee. if the subsequent issue is successful, it is expected to help the company to deeply participate in the construction of PPP and EPC projects in Chengdu New area.

Investment suggestion

The company's newly signed orders continue to grow, and the company's performance continues to maintain strong growth; it continues to benefit from the construction and development of Chengdu New area, with strong long-term development capacity. From 2019 to 2021, the EPS was increased to 0.40,0.72,1.16 yuan per share (the original EPS was 0.34,0.62,0.99 yuan per share), corresponding to PE25, 14,9 times. Maintain the "buy" rating and maintain the target price of 13.5 yuan.

Risk hint: the growth rate of fixed asset investment slows down, and the progress of the project is not as expected.