Events:
The company released its semi-annual report for 2020 on August 27th, with operating income of 827 million yuan in the first half of the year, down 32.25% from the same period last year, and net profit of 20.0581 million yuan, down 66.73% from the same period last year.
Comments:
The company is actively improving its operation, and the decline in performance has gradually narrowed. In the first half of the year, the operating income was 827 million yuan, down 32.25% from the same period last year, and the net profit was 20.0581 million yuan, down 66.73% from the same period last year. From a quarterly point of view, the operating income in the first quarter was 216 million yuan, down 52.38% from the same period last year, and the net profit was 7.9579 million yuan. In the face of the impact of the epidemic and the downward economic trend, the company overcame the difficulties, improved its operation, and achieved revenue of 611 million yuan in the second quarter alone. the year-on-year decline narrowed to 20.34%, an increase of 182.54% over the first quarter, and a net profit of 28.016 million yuan. The year-on-year decline narrowed to 11.47%, reversed the unfavorable situation, turned losses into profits, and basically achieved the performance targets for the first half of the year.
The completion end warmed up, and the gross margin of the residential hardcover business improved. In the first half of the year, the national real estate development investment growth rate became positive, up 1.9% from the same period last year. The company's residential fine decoration business achieved revenue of 217 million yuan, and the gross profit margin increased to 15.69% year-on-year due to the company's strict cost control. The whole decoration market is about to pick up, and the company's decoration business revenue will continue to be repaired.
The strong entry of Zhuhai SASAC is expected to bring new opportunities for development. In April 2020, the company signed the "Equity acquisition Agreement" with Zhuhai Huafa entity Industrial Investment Holdings Co., Ltd. in August of the same year, the transfer registration was completed, and the controlling shareholder of the company will be changed to Huashi Holdings. The actual controller will be changed to Zhuhai SASAC. The company's acquisition of Fujian Mindong Construction Engineering expansion business in 2018 is conducive to Huashi holding municipal government construction projects and real estate development projects, while the company's main decoration business can provide it with quality services. the two sides achieve business complementarity, and in August 2020, the company signed a strategic cooperation agreement with Zhuhai Gree Electric Appliances. At present, the company's revenue in southern China accounts for 37.85%. After the cooperation project is carried out in an orderly manner, the company's performance is expected to bottom out.
The company's business was greatly affected by the epidemic, so it downgraded its profit forecast and gave the company an "overweight" rating. It is estimated that the EPS of the company from 2020 to 2022 is 0.30 yuan / 0.35 yuan / 0.40 yuan respectively.
Risk hints: the risk of recurrence of the epidemic in the second half of the year, systemic risk.