Hongrun Construction released its annual report in 2019: the company achieved operating income of 11.943 billion yuan in 2019, an increase of 20.78% over the same period last year; operating profit of 524 million yuan, down 4.18% over the same period last year; and net profit of 351 million yuan, an increase of 16.78% over the same period last year. Of this total, Q4 achieved an operating income of 4.804 billion yuan, an increase of 45.90% over the same period last year, and a net profit of 118 million yuan, an increase of 52.60% over the same period last year.
The newly signed contract value of the company in 2019 was 9.29 billion yuan, down 11.4% from the same period last year. The newly signed contracts for rail transit, municipal administration and housing construction were 2.11 billion yuan, 2.27 billion yuan and 3.38 billion yuan respectively, representing year-on-year changes of-63.16%,-42.69% and 61.19%, respectively.
The company achieved an operating income of 11.943 billion yuan in 2019, an increase of 20.78% over the same period last year. The revenue of Q1, Q2, Q3 and Q4 increased by 18.23%,-4.90%, 10.09% and 45.90% respectively compared with the same period last year. Benefiting from the construction peak of subway projects in cities such as Shanghai and Hangzhou, the recognition of rail transit business income has accelerated.
The company achieved a comprehensive gross profit margin of 11.24% in 2019, down 1.14pct from the same period last year. The net interest rate reached 3.25%, an increase of 1.25pct over the same period last year. The decrease in gross profit margin and the increase in net profit margin are mainly due to the decrease in expense rate and the sharp decrease in non-operating expenses over the same period last year.
The company's expense rate during 2019 was 5.15%, a year-on-year decline in 0.74pct, mainly due to the decline in management expense rate and financial expense rate compared with the same period last year. The net operating cash flow per share of the company in 2019 was 1.00 yuan, which was higher than that of the same period last year.
Profit forecast and rating: we expect the EPS for 2020-2022 to be 0.35,0.39,0.43 respectively, and the corresponding PE for the closing price on April 24 will be 13.5,12.3 and 11.2 times respectively, maintaining the "prudent overweight" rating.
Risk hints: macroeconomic downside risks, infrastructure investment is not as expected, order landing is not as expected, Yangtze River Delta integration construction is not as expected, Guangdong-Hong Kong-Macau Greater Bay Area's business development is not as expected.