Core ideas:
1. Event
The company released its annual report in 2019, with revenue of 3.58 billion yuan in 2019, an increase of 37.56% over the same period last year, and net profit of 486 million yuan, down 54.69% from the same period last year. According to the company's quarterly report for 2020, 2020Q1 achieved a revenue of 305 million yuan, down 76.66% from the same period last year, and its mother lost 15 million yuan in net profit.
2. Our analysis and judgment
Major asset sales led to a high base, and deduction of non-net profit remained stable in 2019. In 2019, the company's homing net profit decreased by 54.69% compared with the same period last year, mainly due to the implementation of major asset sales in 2018, resulting in a high base of 577 million yuan in asset transfer income. In 2019, the company deducted non-net profit of 486 million yuan, down 2.14% from the same period last year, and basically remained stable.
The performance of 2020Q1 was greatly affected by the epidemic. The main reasons for 2020Q1's losses are as follows:
On the one hand, most of the completed houses of the company have been sold, only a few are left for sale, and the income from housing sales has dropped greatly compared with the same period last year; on the other hand, affected by the COVID-19 epidemic, strict epidemic prevention and control measures have been implemented all over the country, and the time for enterprises to resume work has been delayed, logistics and personnel mobility have been limited, and the production and operation of various business sectors of the company have been affected to a certain extent.
Actively develop the business of industrial park development and invigorate the land. The company plans to set up a special fund to invest and operate specific projects and other modes of operation, to explore the comprehensive development business model of industrial parks in many cities across the country, and to build a comprehensive development brand of industrial parks. At present, the company is rich in reserve projects in Nanjing and Chongqing. The two projects of Jiangshan Huijin and Jiangshan Huijin in Nanjing are industrial park projects upgraded by the original industrial land in the system. The company is paying close attention to the construction and sales of Jiangshan Huijin and Jiangshan Huijin projects, which will be delivered one after another from 2020. it is expected to last until 2021-2022, which will bring sustained and stable income for the company. At the same time, the company is actively carrying out work on the land activation of Huaneng Group, combing the project and carrying out preliminary work. At present, Huaneng Group has sorted out 21 pieces of idle stock land in 9 cities in southwest China, East China, North China and South China.
"supply chain + wire and cable" continues to make efforts. (1) supply chain: backed by Huaneng Group, the company strives to develop modern intelligent supply chain business, with revenue of 720 million yuan in 2019, a rapid growth; (2) wires and cables: wire and cable is one of the commodities supply chain business products, which forms a synergistic effect with the construction of intelligent supply chain. In 2019, the cable business achieved revenue of 1.036 billion yuan, showing a steady performance.
3. Investment advice
The company focuses on the development of industrial park development, integrated asset operation and commodity supply chain business. As a platform for land use and revitalization of idle stock of China Huaneng Group Co., Ltd., the future is promising. We estimate that the company's operating income from 2020 to 2022 will be 4.287 billion yuan, 5.176 billion yuan and 6.299 billion yuan, and the EPS will be 0.54,0.70,0.91 yuan, and the corresponding share price PE will be 10.1,7.9,6.1 times, giving the company a cautious recommendation rating for the first time.
4. Risk hint
The risk of less than expected land acquisition; the risk of COVID-19 epidemic affecting more than expected; the risk of cash flow decline.