We believe that the gradual decline in the expense rate during the company period is conducive to the improvement of the company's profitability, and the construction business remains the key business to support revenue growth. The company's PE and PB for 20 years are 11.9 and 1.5 respectively, maintaining a "prudent recommendation-A" investment rating.
Construction business supports high revenue growth in 2019, while 2020Q1 revenue has declined slightly. The revenue of 2019 and 2020Q1 was 11.943 billion yuan and 2.364 billion yuan respectively, an increase of 20.78% and-5.62% over the same period last year. The net profit returned to the mother was 351 million yuan and 96 million yuan, an increase of 16.78% and 1.26% respectively over the same period last year. From a business point of view, in 2019, the company's construction and municipal infrastructure investment business, real estate business, new energy development business, and other business revenues of 10.466 billion yuan, 1.316 billion yuan, 122 million yuan and 39 million yuan, year-on-year changes of 19.14%, 38.76%,-11.36%, 126.79% of the company's construction business income 2.307 billion yuan, accounting for 97.58%. Construction business is the main business of the company, supporting the rapid growth of revenue in 2019. Affected by the epidemic, 2020Q1 revenue decreased slightly.
In 2019, gross margin declined slightly and net cash flow into 2020Q1 decreased. The gross profit margin in 2019 decreased by 1.14% to 11.24% compared with the same period last year. In terms of business, investment in construction and municipal infrastructure decreased by 1.55% to 8.37% compared with last year, with gross profit margins of 5.30%, 8.47% and 9.16% for housing construction, municipal and rail transit projects, respectively. The gross profit margin of the real estate business increased by 0.82% to 29.49%. The expense rate during 2019 and 2020Q1 is 5.15% and 4.75% respectively, of which the management expense rate is 3.90% and 1.43% respectively; the financial expense rate is 1.14% and 1.09% respectively, and the sales expense rate is 0.11%, which remains unchanged from the same period last year. In 2019, operating cash flow increased by 694 million yuan to 1.104 billion yuan over the same period last year, mainly due to the company's focus on fund management and planning, which effectively improved the capital turnover efficiency of major single projects. 2020Q1's net cash flow increased by 18 million yuan to-307 million yuan compared with the same period last year.
Policy overweight orders are expected to continue to improve, maintaining the "prudent recommendation-A" rating. The company is the first private enterprise in China to carry out underground shield construction of urban rail transit, with construction business as the core, multi-layout real estate, new energy development and other areas to thicken the company's performance. As the recovery of infrastructure is expected to be confirmed, the company will benefit from positive policies. It is estimated that 20 years, 21 years EPS0.35 yuan, 0.40 yuan, corresponding to PE 11.9 times, 10.7 times, to maintain the "prudent recommendation-A" rating.
Risk hint: infrastructure investment is not as expected and raw materials rise sharply.