This report is read as follows:
The full-year performance fell sharply less than expected, but the performance reversal in the fourth quarter was better than expected. Based on the policy strengthening efforts to stabilize infrastructure and the fundamental reversal trend, it is expected that 2020 will be much better than 2019, maintaining the overweight rating.
Main points of investment:
Maintain and increase holdings. The company disclosed its performance in 2019, KuaiBao, with a revenue of about 7.7 billion yuan and a net profit of about 61 million yuan, which fell by 96%, which was lower than expected. At the same time, considering that the company's strict control project undertaking paid more attention to sustainability and cash flow, we downgraded our forecast for 2019-21 to 0.02 EPS 0.38xpx 0.47 yuan (formerly 0.67xb 0.78exp 0.89 yuan) growth rate-96pare 1585pm 22%. The target price is reduced to 6.43 yuan, which corresponds to the target price of 16.9 PE in 21 years, which is 13.7 times higher.
The overall performance fell sharply in 2019, first, the macro factor is the continuation of the negative impact of the previous two years of local debt and PPP clean-up, 2019 fee and tax cuts further reduced the local financial investment capacity, infrastructure investment is far lower than the market expectations of low single digits hovering around the bottom, especially the PPP garden funds higher requirements of the industry as a whole more difficult. Second, under the pressure of the financial environment and industry policy changes, the company's balance sheet is in the process of deleveraging, actively shutting down and transferring some difficult PPP projects, controlling the pace of investment, reducing operational investment, reducing operating income while expenses continue to occur.
In 2019, the company's revenue increased by-60% in a single quarter. The company's revenue increased by-60% in a single quarter, and its net profit increased by-2852% in a single quarter. The net profit returned to its mother increased by-2852%, and its net profit was 950 million (Q3 was 1.6 billion and 9 million, respectively). The fundamental reversal trend was basically established. On September 30, 2019, the transfer of controlling shares was completed and the liquidity of the company was significantly enhanced. with the help of the controlling shareholders and their concerted actors, the company's operation and production in the fourth quarter has gradually entered a trend of rapid and healthy development. With the global spread of the epidemic and the increasing downward pressure on the economy, the Politburo meeting once again stressed the active fiscal and monetary policy, and infrastructure investment will pick up. The inflection point of the company's performance has been basically established, and the beneficiary policy has warmed up the company's positive changes, which is much better in 2020 than in 2019.
Catalyst: policy efforts to stimulate the economy, PPP policy repair, order performance acceleration, etc.
Risk hints: inflation restricts policy space, local government financial resources restrict cash flow, etc.