19Q4's operating performance has picked up sharply, and fundamentals are expected to reverse in 2020 and maintain a "buy" rating.
The company announced 19FY performance KuaiBao, 19 years revenue of 7.712 billion yuan, yoy-42%, return net profit of 61 million yuan, yoy-96%, lower than the market and our expectations, but Q4 single-quarter revenue and net profit showed a significant improvement compared with the same period last year. We believe that after the actual controller is changed to the background of state-owned assets, the debt structure and financing costs are in the process of significant improvement, and the quality of on-hand orders is expected to be significantly improved after withdrawal and transformation. We expect that the financing situation of the company may continue to improve in 2020, and the progress of the project may tend to be normal. at the same time, the fundamental reversal of the industry is also expected to occur in 2020. as the traditional leader of the industry, the company is expected to be the first to hit bottom and rebound. It is estimated that the EPS0.02/0.35/0.52 will be RMB $19-21, maintaining the "buy" rating.
Q4 single-quarter revenue and return net profit have reversed the previous five consecutive quarters of decline.
The company's 19Q1-4 single-quarter revenue increased by-60% Rafael 70% Rafael 48% Universe 6.4%, single-quarter net profit increased by-2852% Rexi 195% Rexi 97% Citrus 52.5%, while before Q4 the company has had five consecutive quarterly negative growth in revenue and net profit. The company completed the change of control in early October 19, and the Chaoyang State-owned assets Supervision and Administration Commission guaranteed some of the company's bonds at the end of September. We believe that there are signs of a reversal in the company's Q4 performance, which is related to the significant improvement in the company's financing situation and the gradual return to normal project progress after the state-owned investment. We expect the expense rate to improve significantly compared with the previous quarter during the single quarter of 19Q4. Based on the company's newly signed orders and revenue, we expect that the company still has plenty of valid orders on hand, and revenue is expected to return to the growth trend in 2020.
Debt structure / cash flow is expected to continue to improve, government investment regulations help reduce inventory and receivables risk according to the company's 20191204 announcement of investor exchange minutes, after state-owned shares, the company's proportion of medium-and long-term debt gradually increased, alleviating the pressure of short-term debt repayment, comprehensive financing costs dropped from 10% before 19Q3 to no more than 6% of the new financing agreement, and CFI outflows from PPP projects are expected to decline in the future.
We believe that the provisions in the Government Investment regulations prohibiting arrears of project payments have strong protection for private enterprises, and it is expected that the liquidation of EPC and similar EPC projects that account for more than 60% of the company's inventory and receivables is expected to be accelerated, and the risk of bad debts of inventory and accounts receivable is expected to be reduced. At the same time, the improvement of project financing is also expected to directly benefit the company's operational payback. As the company gradually combs the projects in hand, we expect that the quality of the follow-up projects is expected to be higher, and the health of the company's future development is expected to be significantly improved.
We are optimistic about the reversal of the fundamentals of the garden sector and the company, and maintain the "buy" rating. We believe that in 2020, the garden sector will face the improvement of stock and debt financing, the gradual clearing of historical baggage, the improvement of the business environment, and the high level of industry prosperity. Fundamentals reversal is expected. As an industry leader, the company took the lead in taking rescue measures, and 19Q4 is beginning to bear fruit, so the fundamental reversal may be earlier than that of the industry as a whole. We believe that the company's capital structure is expected to continue to be optimized in the future, and ecological governance and solid waste business are expected to return to the growth channel. According to the company's debt optimization and 19FY operation, we expect 19-21 EPS0.02/0.35/0.52 yuan (the previous value is 0.80Universe 0.96 Wind 1.16 yuan), the current comparable company 2020 Wind consensus expectation PE14.7 times, taking into account the company's performance reversal elasticity or higher, the recognition of 20 years 15-16 times PE, the target price of 5.25-5.60 yuan, to maintain the "buy" rating.
Risk hint: the stock and newly signed projects are not as advanced as expected, and the improvement of capital structure is not as expected.