Main points of investment
Event: in the first three quarters of 2020, the company achieved operating income of 2.536 billion yuan, down 1.73% from the same period last year; net profit from home was 272 million yuan, up 7.21% from the same period last year; net profit from non-return was 258 million yuan, up 3.33% from the same period last year; and the weighted average ROE decreased 2.36pct to 7.56% from the same period last year.
The performance of positive income growth continued to pick up in a single quarter. The growth rate of income in a single quarter returned to positive for the first time. 20Q3 realized operating income of 930 million yuan in a single quarter, an increase of 3.92%, a net profit of 113 million yuan, an increase of 15.85%, and a non-return net profit of 101 million yuan, an increase of 5.04%. 20Q1-3 realized an operating income of 2.536 billion yuan, a decrease of 1.73%, a net profit of 272 million yuan, an increase of 7.21%, and a net profit of 258 million yuan, an increase of 3.33%. The decline in income narrowed and performance continued to pick up.
During the period, the expense rate increased by 2.54pct to 18.42%, mainly due to the increase in the financial expense rate. 20Q1-3, the cost during the company period increased by 14.00% to 467 million yuan compared with the same period last year, and the expense rate increased by 2.54pct to 18.42%. Among them, sales expenses 70 million yuan (yoy-5.53%), management expenses 98 million yuan (yoy-8.83%), research and development expenses 40 million yuan (yoy+4.69%), financial expenses 259 million yuan (yoy+36.07%). The rates of sales, management, R & D and financial expenses decreased by 0.11pct, decreased by 0.28pct, increased by 0.10pct, and increased by 2.83pct to 2.78%, 3.85%, 1.59% and 10.20%, respectively. The increase in the rate of financial expenses is mainly due to the increase in the operation and financing scale of the project compared with the same period, and the increase in the expense of interest expenditure compared with the same period.
The net cash flow of business activities increased by 56%, escorting high-quality development. 1) the net cash flow of 20Q1-3 operating activities was 569 million yuan, with an increase of 56.15% with an increase of 56.15%. 2) the net cash flow of investment activities was-912 million yuan, with an increase of 63.85%. 3) the net cash flow of fund-raising activities was 144 million yuan, with a decrease of 95.30%.
The net cash flow of business activities increased by 56%, mainly due to the acceleration of payback and optimization of payment since the improvement of the domestic epidemic prevention and control situation.
The asset-liability ratio continued to decline and operational efficiency improved. 20Q3's asset-liability ratio was 71.17%, down 0.91pct from the same period last year and 2.93pct from the beginning of the year. The turnover days of accounts receivable increased from 23.11 days to 130.54 days, the days of inventory turnover increased from 8.11 days to 102.85 days, the days of accounts payable turnover increased from 67.78 days to 325.19 days, and the net business cycle decreased by 36.56 days to-91.8 days compared with the same period last year.
Energy conservation in the master, tens of millions of tons of water resources integration is expected. By the end of 19, China Energy Saving Group had a total of 886.25 million tons of water assets in hand. Considering the problem of inter-industry competition, as well as the cooperation mode between Guozhen Environmental Protection and central enterprises in the early stage of high-quality operation capability, the future resource integration or "operational technology + capital" light asset model is still worth looking forward to. Central Water as the main body of the group's environmental protection water business, with reference to its business structure, the scale of water supply accounts for a relatively large proportion, and the company ploughs the sewage treatment business plate, and the two sides are expected to achieve synergy and complementarity of different business advantages.
After the mixed reform, the financing capacity is restored, and the expansion can be accelerated. The company's credit system is in line with China's energy conservation, the financing capacity has been improved, financing channels have been broadened, and financing costs have been reduced. The improvement of financing will enhance the company's ability to acquire projects, promote project progress, and accelerate expansion.
Profit forecast: according to the disclosure of operations in the three quarterly reports of 20 years, and considering the impact of share dilution after the completion of the fixed increase, it is estimated that the company's 20-22 EPS (calculated by the net profit of the parent divided by the total share capital at the end of the period) is 0.55, 0.66 and 0.80 yuan, respectively, corresponding to PE of 17-14-12, maintaining a "buy" rating.
Risk hint: the construction progress of the project is not up to expectations, and the financing improvement is not up to expectations.