Event: the company released its annual report in 2019, with an operating income of 1.232 billion yuan in 2019, + 3.88% compared with the same period last year, and a net profit of 156 million yuan, + 13.82% in 2019. The company recently issued a performance forecast for the first quarter of 2020, realizing a net profit of 2081.56-26.7629 million yuan, an increase of 5-35% over the same period last year.
In 2019, the company's revenue from water treatment equipment and centrifuges increased, but its gross profit margin declined, and its operating services were relatively sound. Conforming to the development trend of environmental protection equipment manufacturing industry, the company strives to build a technology research and development system with "technology platform-product line-product" as the main axis. The annual equipment income accounts for more than 60%, of which the operating income of complete sets of water treatment equipment is 478 million yuan, year-on-year + 18.73%, gross profit rate is 43.89%, year-on-year-3.36 pct Centrifuge realized business income of 301 million yuan, + 5.62% year-on-year, gross profit margin of 31.41%, year-on-year-4.83 pct. The decline in gross profit margin on the equipment side of the company is mainly due to the impact of the macroeconomic situation on industry demand. The company's operating services are relatively sound, profit growth, achieving operating income of 334 million yuan, accounting for about 30%, year-on-year-3.31%, gross profit margin 45.48%, year-on-year + 7.77 pct.
In 2020, the company will take the internal market of China Construction system and the strategic cooperation units established by China Construction system as an opportunity to innovate cooperation models and strategies, speed up the exploration of new areas of environmental protection business, and create new performance growth points. China Construction Group became the actual controller of the company in January 2019. After China Construction Group took over, through "resources + funds", on the one hand, it helped the company get rid of potential debt problems, on the other hand, China Construction Group was able to develop environmental protection business on the platform of China Construction Environmental Energy. We divide the environmental protection industry into three stages: "state-owned assets save life-- state-owned assets holding-- coordinated development". At present, the industry as a whole is moving towards the third stage. In the future, China Construction Group is also expected to integrate its environmental protection business, while helping the company break through the ceiling of the industry segment, while bringing municipal engineering project resources to the company, and further thickening the company's performance.
Maintain a "buy" rating. According to the company's equipment sales and existing orders, the company lowered its profit forecast for 20-21 years and added 22-year profit forecasts. It is estimated that the company's net profit for 20-22 years will be 1.95 pesxis 267 million yuan (the original value for 20-21 years is 223,272 million yuan), and the corresponding EPS for 20-22 years will be 0.29 pounds 0.39 yuan, and the current stock price will be 17 times for 20 years PE. We believe that in the follow-up, China Construction Group will continue to bring new business resources to listed companies, and the year 2020 will be the end of the "Water Ten articles". China Construction Group is expected to expand its related business on the platform of listed companies, further increase the company's business and assets, and maintain its "buy" rating.
Risk hint: the company's original business development is lower than expected; the support of China Construction Group is lower than expected.