The company recently released its annual report for 2019, with operating income of 3.311 billion yuan during the reporting period, an increase of 247.3% over the same period last year, and a net profit of 105 million yuan, an increase of 91.0% over the same period last year.
Orders for the whole year of 2019 increased by 221%, and the high-on-hand order income ratio supports the high income in the future. As the only state-owned listed company under the management committee of Chengdu High-tech Zone, it has incomparable advantages in undertaking orders for related projects in Chengdu Tianfu International Airport Metro and Tianfu New area. In 2019, the company signed a new order of 8.497 billion yuan, an increase of 221%; an on-hand order of 11.448 billion, an increase of 217.84%, with a revenue ratio of 3.5, providing a good support for the continued high growth of income in the future. Chengdu has continued to invest heavily in construction around the new airport since 2016, and it is expected that the company's new orders will continue to grow rapidly in 2020.
Revenue has grown rapidly for five consecutive quarters, and the gross profit margin of the construction business has risen somewhat. The company achieved revenue of 3.311 billion yuan in 2019, a substantial increase of 247.3% over the same period last year, and has grown by more than 50% in a single quarter for five consecutive quarters. Since the new chairman of the board was officially in place in January 2019, the development idea of the company to become bigger and stronger is gradually clear, and the main construction industry continues to grow rapidly. The company's gross profit margin in 2019 was 10.33%, down 6.55 percentage points from the same period last year, mainly due to the substantial growth of low gross margin construction business, while the futures and real estate rental business with high gross margin was not the company's core business and basically did not grow. The gross profit margin of the construction business alone is 6.92%, an increase of 0.3 percentage points over the same period. The company currently accepts orders with a high gross margin, and it is expected that the construction margin will still increase, but the overall gross margin may decline slightly.
The scale effect of the decline in expense rate is significant. It is expected that the fixed increase progress will continue to accelerate the rigidity of expenses during the company period. While the income is rising rapidly, the expense rate during the period is 5.88%, which is 6.65% lower than that in 2018. The scale effect is significant. Among them, the sales expense rate was 3.44%, down 7.98%; the management expense rate was 2.53%, down 3.02%; due to the substantial growth in construction business, the working capital investment was more, and the interest income was significantly lower than that in 18 years. The company had a 33.79 million return on asset impairment losses in 2018, but almost none in 2019. Taken together, the company achieved a net profit of 105 million yuan in 2019, an increase of 91.0% over the same period last year.
The company's income-to-cash ratio in 2019 was 0.5648, down 12.26 percent from the same period last year, and cash-to-cash ratio was 0.5034, up 9.69 percent from the same period last year. Due to the large number of PPP orders and the rapid growth of income, the company invested more working capital, the operating cash flow and investment cash flow continued to flow out substantially, and the company's asset-liability ratio increased to 81.21% from 75.24% at the end of 2018. In order to solve the capital problem, the company put forward an additional issuance plan of 800 million last year. If implemented smoothly, the asset-liability ratio is expected to drop to 71.5%, and the company's revenue can maintain rapid growth. Not long ago, with the introduction of new rules and regulations, institutional investors have increased their enthusiasm for Dingzeng enterprises, and we expect the company to accelerate the progress of Dingzeng in the future.
Investment suggestion
Benefiting from the continuous large investment in Chengdu High-tech Zone, the company's revenue and profits continue to grow rapidly. Chengdu High-tech Zone continues to expand and strengthen the company's thinking, the follow-up increase is expected to accelerate. We updated the company's EPS of 0.66,0.96,1.21 yuan per share in 2020-2022 (the original EPS was 0.72,1.16 yuan per share in 2021-2022), corresponding to 14,9,7 times of PE, maintaining the "buy" rating and maintaining the target price of 13.5 yuan.
Risk hint: the progress of the project caused by the epidemic is not as expected, and the progress of additional issuance is not as expected.