Q2 has made a profit in a single quarter, and its fundamentals are expected to continue to improve. On August 28, the "Buy" rating company released 2020 medium report. H1 company's revenue was 1.78 billion yuan, yoy-18.9%, 's parent net profit was-188 million yuan, 19H1 lost 894 million yuan, and 20H1 deducted non-net profit-288 million yuan, significantly reducing losses compared with the same period last year. The net outflow of CFO of 20H1 company was 960 million yuan, which was 160 million yuan more than the same period last year. The company Q2 is profitable in a single quarter, the expense rate is significantly lower than the same period last year, the structure and business adjustment are beginning to achieve results, and the debt structure at the end of 20H1 is healthier than that at the end of 19FY. The company's convertible bond issuance has passed the second feedback, and has issued a fixed increase plan, we believe that the company's fundamentals are expected to continue to improve in the future, it is estimated that 20-22 EPS0.30/0.42/0.59 yuan, maintain the "buy" rating.
The sharp reduction in losses in the first half of the year is mainly due to the good control of the cost side.
Q1/Q2 's single-quarter revenue increased by-56.5% compared with the same period last year, and the revenue carry-over accelerated after the epidemic.
The H1 company's engineering / environmental revenue increased by-33.7% compared with the same period last year, the revenue share changed by-16.5/15.5pct, the proportion of environmental protection business with low gross profit margin increased, and the year-on-year decline in gross profit margins of the two main industries led to a year-on-year decline in the company's comprehensive gross profit margin (3.6pct). However, the structural adjustment of the company has achieved remarkable results. The rate of 20H1 sales / management / finance / R & D expenses has changed from the same period last year-0.23/-14.98/0.22/-1.8pct, of which the absolute value of financial expenses decreased by 132 million yuan compared with the same period last year. The increase in investment income caused by H1 equity adjustment and the downward trend in the proportion of credit impairment loss to income also play an obvious role in profit margin repair, but on the whole, the efficiency improvement caused by business and organizational structure adjustment is the core reason for 20H1 to reduce losses significantly.
The debt structure has significantly improved, and the follow-up capital side is expected to receive continuous support for the company's asset-liability ratio at the end of 20H1, which is 69.9%, slightly lower than the same period last year. The balance of interest-bearing liabilities at the end of the period is 14.24 billion yuan, which is a slight increase of 2.2 billion yuan over the end of 19FY, but the proportion of maturing debt within one year is 17.1% lower than that at the end of 19FY, and the debt structure has improved. The company announced that the cost of new bank loans so far this year is basically around the benchmark interest rate. The company has completed the second feedback on the issuance of preferred shares at the end of July, and announced a plan for an increase of 2 billion yuan in early June. We believe that the company's capital structure is expected to be further optimized in the future. On the asset side, compared with the end of 19FY, the balance of receivables at the end of 20H1 decreased by about 400 million yuan, inventory assets were basically flat, and PPP project investment and operating assets increased slightly. We believe that the company is expected to continue to speed up the collection of gold and gold and improve its asset structure and cash flow in the future.
Q2 sets a good tone for the whole year and maintains a "buy" rating
The company Q2 achieves a net interest rate of 7.99% in a single quarter, the quarterly sales / management expense rate is lower than the 18Q2 level, and the financial expenses are also close to the 18Q2 level. We expect that with the continuous replacement of the company's high-cost interest-bearing liabilities and the promotion of equity financing, the financial expenses of the H2 company may be lower than that of H1, and the revenue carry-over speed may be faster than that of H1. However, taking into account the impact of the epidemic on the increase in gross profit margin and the uncertainty of the company's financing progress, we lowered our forecast EPS for 20-22 to 0.42 Wind 0.59 yuan (the previous value 0.35 Wind 0.52 yuan for 20-21 years), which is now comparable to the company's consensus expectation of PE18.3 in 2020. We expect the company's follow-up fundamentals to recover faster than the industry average, and approval will give the company 20 times PE in 2020. Corresponding to the target price of 6.00 yuan (the previous value is 5.25-5.60 yuan), maintain the "buy" rating.
Risk hint: the progress of order carry-over is not as expected, and the progress of profitability improvement is not as expected.