Events:
The company released its 2019 annual report on the evening of April 7: in 2019, the company realized revenue of 734 million yuan, an increase of 19.74% over the same period last year, and realized a net profit of 229.9979 million yuan belonging to shareholders of listed companies, an increase of 27.28% over the same period last year. The net profit after deduction belonging to shareholders of listed companies was 216.4176 million yuan, an increase of 22.82% over the same period last year. At the same time, it issued a forecast of the first quarterly report in 2020: the company realized a net profit of 4422.27-56.8578 million yuan during the reporting period, down 10-30% from the same period last year. At the same time, there will be a dividend of 5 yuan for every 10 shares and 10 shares for every 10 shares in the Capital Provident Fund. In this regard, our comments are as follows:
Main points of investment:
The increase in net profit was 27.28% in line with expectations, and the growth in operating business was more obvious. In 2019, the company realized revenue of 734 million yuan, an increase of 19.74% over the same period last year, and realized net profit of 229.9979 million yuan belonging to shareholders of listed companies, an increase of 27.28% over the same period last year, which was in line with market expectations. In terms of business, the revenue of the environmental monitoring system was 457 million yuan, an increase of 2.64% over the same period last year, the revenue of the operation business was 205 million yuan, a year-on-year increase of 54.13%, and the revenue of software development was 16 million yuan, a year-on-year increase of 79.36%. The growth rate of operation and software business is obvious. In terms of gross profit margin: the gross profit margin of environmental monitoring system and operating services is 59.36% and 41.24% respectively, reducing 1.01/3.32pct respectively over the same period last year, while the company's comprehensive gross profit margin is 51.75%, reducing 2.58pct compared with the same period last year. In terms of period expenses: the rate of sales / management / R & D expenses is 7.81/5.50/6.79pct, respectively, reducing 1.26/0.37/0pct respectively. The net cash flow of the company's operating activities was 257 million yuan, an increase of 138.51% over the same period last year, and the cash flow of operating activities improved.
The epidemic affected Q1 net profit has declined, sufficient orders-on-hand performance for the whole year is guaranteed to grow steadily affected by COVID-19 epidemic, travel and construction conditions are inconvenient, project construction and installation progress is blocked, the company's regional project implementation progress is delayed to varying degrees, resulting in the company's net profit in the first quarter of 2020 fell by 10-30%, but the epidemic has only a short-term impact on the company's performance, with the end of the epidemic. Customers begin to resume work one after another, and the impact of the epidemic in the first quarter can be gradually eliminated by speeding up the progress of the project. At the end of 2016-2019, the company's on-hand orders were 3.43,4.77,9.96 and 1.214 billion yuan respectively, the amount of orders reached a record high year after year, the number of orders on hand is sufficient, and the company's annual performance is guaranteed.
A leading integrated service provider for environmental monitoring, benefiting from the high scene of the monitoring industry.
The company is a leading manufacturer of environmental monitoring instruments in China, mainly engaged in environmental monitoring system research and development, production, sales and operation services, products including water quality monitoring, air monitoring, environmental monitoring information management systems and operational services, etc., widely used in environmental protection, municipal, water conservancy and pollution source enterprises. The company has obvious advantages in technology and brand, and is in a leading position in the industry.
In recent years, with the promotion of the vertical reform of environmental monitoring, the collection of monitoring authority, and the normalization of environmental protection inspectors, the monitoring industry in China has made some progress. The "eco-environmental monitoring network construction plan" proposes that by 2020, the national eco-environmental monitoring network will basically achieve full coverage of environmental quality, key pollution sources and ecological monitoring, and the interconnection and sharing of all kinds of monitoring data systems at all levels. we will initially build an ecological environment network of "integration of heaven and earth". At the same time, according to the content of the third High-end Forum on Environmental Monitoring and Services in 2019, from the government level, until the middle of this century, the task of environmental quality monitoring will still be very heavy, and the world-class ecological environment monitoring system will eventually be built in the future. During the 14th five-year Plan period, environmental monitoring will deepen the deployment of sites and monitoring indicators in the atmosphere, water quality and soil, as well as marine ecological environment monitoring, groundwater environment monitoring, greenhouse gas monitoring and ecological condition monitoring. The environmental monitoring industry still has great opportunities for development, and the company is expected to fully benefit.
Profit forecast and investment rating: maintain the company's "overweight" rating. We are optimistic about the development prospect of the environmental monitoring industry and the position of the company in the industry. It is estimated that the company's 2020-2022EPS is 3.45,4.17,4.89 yuan respectively, and the corresponding share price PE is 22,18,16 times, maintaining the company's "overweight" rating.
Risk hints: lower-than-expected risk of environmental monitoring policy and implementation, lower-than-expected risk of company order acquisition and execution, lower-than-expected risk of fund-raising projects, significant increase risk of accounts receivable, interest rate upward risk, macroeconomic downside risk.
