Event description
The company released three quarterly reports for 2020, achieving revenue of 4.524 billion yuan, down 14.17%, and attributable net profit of 76 million yuan, down 74.95%. Net profit after deducting non-profit was 53 million yuan, down 82.55%.
Event comment
Q3 single-quarter revenue growth is slightly positive, performance fell sharply. The company's revenue fell by 14% in the first three quarters, narrowing from-23% in the first half of the year, and net profit attributable to the company fell sharply by 75%, significantly faster than revenue, mainly due to:
1) in the case of declining revenue, various costs and expenditures are relatively rigid, and the gross profit margin fell by 5.24pct to 19.14% in the first three quarters. 2) affected by the tightening of market financing and the slowing down of local financial payments, the company increased the calculation of asset and credit impairment losses, with the same increase in 0.86pct to 2.22%. The net profit attributable to non-deduction decreased even more, mainly due to investment income of about 18 million yuan from the disposal of subsidiaries this year. From a quarterly point of view, the company's Q1-Q3 revenue increased by-72.5%, 1.6% and 0.3% respectively, and the attributable net profit increased by-643.6%, 2.4% and-31.8% respectively, but the performance declined significantly.
The gross profit margin fell and the expense rate increased slightly during the period. 2020Q1-Q3 's gross profit margin decreased by 5.24pct with 19.14%. During the period, the expense rate (including R & D expenses) increased by 0.15pct to 16.06%, mainly due to the increase in R & D and financial expenditure rates by 1.86pct (due to increased R & D investment), 0.24pct to 5.12% and 3.69%, respectively, and sales and management expenses rates by 0.92cpt and 1.03pct to 1.13% and 6.12%, respectively. The loss rate of asset and credit impairment increased by 0.86pct to 2.22%, which was mainly due to the increase in impairment loss in accordance with the accounting policy in the current period; the vested net interest rate was 1.69% with a decrease in 4.10pct.
The operating cash flow decreased significantly, and the cash payment increased significantly. In the first three quarters, the company had a net operating cash outflow of 413 million yuan, an increase of 275 million yuan over the same period last year, mainly due to the company's acceleration of construction progress and the increase in project and material payments, and the ratio of receipt to cash increased by 14.02pct and 23.34pct to 101.34% and 118.02%, respectively. By the end of Q3, the company's receivables decreased by 1.69% to 3.277 billion yuan compared with the beginning of the period, inventory and contract assets increased by 8.58% to 6.468 billion yuan, payables decreased by 10.22% to 7.064 billion yuan, and advance receipts and contract liabilities increased by 13.16% to 972 million yuan.
Fixed increase is expected to improve the asset structure, spin-off listing is worth looking forward to. The company's fixed increase plan was approved by the Securities Regulatory Commission in mid-October, and it is proposed to issue no more than 459 million shares. if successfully implemented, it will effectively improve the asset-liability structure, while Hengrun Technology Group is steadily spinning off to be listed on the gem. If the split is successful, it is also worth looking forward to improving the company's current valuation level. It is estimated that the company's EPS from 2020 to 2021 will be 0.13,0.17,31.17,23.56 times before the corresponding share price, maintaining a "buy" rating.
Risk hint
1. The growth rate of infrastructure investment is lower than expected.
two。 The company lost a lot of money in its overseas business.