This report is read as follows:
The performance in the first three quarters will grow by-30%; the company will actively promote municipal projects such as river and lake governance / ecological restoration, and the research travel business will create a new profit growth point; convertible bonds will raise funds in place to ensure the smooth progress of the business.
Main points of investment:
Maintain caution to increase holdings. Revenue of 2.01 billion yuan (- 8.3%) and net profit of 138 million yuan (- 29.5%) in the first three quarters were slightly lower than expected; subsidiaries that started later in the project affected by the epidemic / science, education, culture and travel business were based in Wuhan / adjusted business scale and speed, and downgraded their forecast for 2020-22 EPS to 0.35 EPS 0.41 peg 0.47 yuan (formerly 0.54 pep 0.63 par 0.74 yuan) growth rate-26par 1715%. Maintain the target price of 5.78 yuan, corresponding to 16.5-14.1 PE in 2020-22, and carefully increase the holdings.
Gross / net interest rates fell and operating cash flow was under pressure. 1) Q1-Q3 single-quarter revenue growth rate-38Maxime 31%, homecoming net profit growth-169 Maxima 31%, deduction non-growth rate-172 Melissa 8 Maxima 31% bot 2) Gross margin for the first three quarters 20% (- 0.1pct), net profit 6.76% (- 2.2pct) 3) period expense rate 10.3% (+ 2.2pct), including management 5.3% (+ 1.1pct) / R & D 2.3% (+ 1.3pct) / financial 2.3% (- 0.6pct); 4) Asset-liability ratio 49.7% (+ 10.6pct) 5) net operating cash flow-170 million yuan (- 190%), cash-to-cash ratio 82.3 (- 4.7pct), received other cash related activities decreased, cash-to-cash ratio 86.4% (+ 15.6pct).
The growth rate of Q3 newly signed rebounded sharply by 94%, and the research travel business is expected to create a new profit growth point.
1) the newly signed order in the first three quarters is 1.66 billion yuan (- 52%), because the company still insists on taking the initiative to strictly control the risk and scale of large-scale municipal projects; the growth rate of new signing of Q1-Q3 in a single quarter is-89%; by the end of Q3, the signed unfinished order of 7.72 billion yuan + Q3 has not yet signed 126 million yuan, and the total guarantee multiple is about 2.7 times. 2) to acquire Xuezhi Wuda, an operator of research and learning travel on the basis of the original brigade team, and systematically promote the business development of teaching, cultural and travel agencies. It will actively carry out research / off-campus practical activities; 3) expand river and lake governance / ecological restoration / sponge city, etc.; 4) 950 million yuan of convertible bonds has been raised (the conversion price is 5.37 yuan / share) From the perspective of monetary funds, 1.32 billion yuan at the end of Q3 ranks in the forefront of the industry, and sufficient funds will provide a strong guarantee for business promotion. 5) according to Economic Observer, the "Operation Guide for the Cooperation Model between the Government and Social Capital" is expected to be issued, which will standardize the performance management of the whole life cycle of the PPP project.
Catalyst: enhanced policy support for ecological and environmental protection, PPP policy repair, order promotion acceleration and other risks such as slower fiscal expenditure, lower-than-expected order promotion, accounts receivable risk, etc.