Events:
The company released its quarterly report for the third quarter of 2019 on the evening of October 29: in the first three quarters, the company realized revenue of 538 million yuan, an increase of 43.11% over the same period last year, a net profit of 42.1338 million yuan, an increase of 33.64%, and a net profit of 40.3622 million yuan after deduction, an increase of 33.38% over the same period last year. Among them, revenue in the third quarter was 172 million yuan (+ 404.18%), and net profit attributable was 10.0456 million yuan (+ 42.90%). The net profit of attribution after deduction is 10.0391 million yuan (+ 74.46%), which is in the range of performance forecast. In this regard, our comments are as follows:
Main points of investment:
The performance has increased by 33.64%. The EPC business has made obvious contribution, and the operating condition has been continuously optimized.
In the first three quarters, the company achieved revenue of 538 million yuan, an increase of 43.11% over the same period last year, a net profit of 42.1338 million yuan, an increase of 33.64% over the same period last year, and a net profit of 40.3622 million yuan after deduction, an increase of 33.38% over the same period last year, which is within the range of performance forecast and in line with market expectations. Revenue in the third quarter reached 172 million yuan, a year-on-year increase of 404.18%, mainly due to the vigorous expansion of EPC business, with EPC contributing 106 million yuan in income. In terms of period expenses: the rate of sales / management / financial expenses is 0.29%, 5.64% and 0, respectively, which is basically the same as that of the same period last year. The R & D expenditure rate was 5.36%, an increase in 3pct over the same period last year, mainly due to the company's increased R & D, resulting in outsourced R & D expenses of 8.34 million yuan. The net cash flow of operating activities was 13.6775 million yuan, a significant improvement from-16.3 million yuan in the same period last year. Accounts receivable totaled 189 million yuan, down from 208 million yuan in the same period last year, mainly due to the company's strengthening the management of accounts receivable and the continuous optimization of the company's operating conditions.
Sufficient orders on hand and growth in performance are guaranteed, and investment in Manmeng Culture is involved in the literature and travel industry.
Since 2019, it has successively won the general contract project of tourism infrastructure supporting project of Liangzhu ruins Park (217 million yuan), the environmental improvement project of Shilongshan south block and the EPC general contract project of Lingshan Road upgrading project (181 million yuan), and the Huaibei Shuo West Lake environmental control project (256 million yuan). Currently, the contract project on hand is more than 700 million yuan, which is 133% of the company's revenue in 2018. Orders on hand are sufficient to ensure future performance growth. In July 2019, the company invested 40 million yuan in Shanghai Manmeng Culture. Its main business is to use it for hotel and tourism image transformation after obtaining the license of animation image IP. At present, it has obtained the copyright of "Totoro", "Kumamoto Bear", "Bread Superman", "uglydoll" and Hans Christian Andersen fairy tale series characters, and signed agreements with Hyatt, Intercontinental, Greenland, Jinjiang, Yaduo, etc. A total of about 500 hotel rooms have been renovated or authorized, and the target is to renovate 5000-6000 hotel rooms by 2020. The company invests Manmeng Culture in the literature and travel industry, on the one hand, it can improve the company's design ability in the animation field, and integrate animation elements into the design of the company's wetland parks, scenic spots and other fields. on the other hand, the operation experience of Manmeng Culture in the hotel can bring coordination for the company to expand its operation business and thicken the company's performance.
Profit forecast and investment rating: maintain the company's "overweight" rating. It is estimated that the company's EPS from 2019 to 2021 will be 0.61,0.74,0.88 yuan respectively, and the corresponding share price PE will be 34,28,24 times respectively, maintaining the company's "overweight" rating.
Risk hints: the risk that the project expansion is less than expected, the risk of a substantial increase in accounts receivable, the uncertainty risk of expanding into the engineering field, the upward risk of interest rate, the lower-than-expected risk of contract execution, and the lower-than-expected risk of synergy with dream culture, macroeconomic downside risk.