[investment points]
The company publishes three quarterly reports for 2020. From January to September 2020, the company achieved operating income of 290.2 billion yuan, an increase of 15.1% over the same period last year, a net profit of 2.47 billion yuan, an increase of 4.2% over the same period last year, and a net profit of 2.14 billion yuan, an increase of 15.0% over the same period last year. In the third quarter of 2020, the company achieved operating income of 111.48 billion yuan, an increase of 21.1% over the same period last year, a net profit of 860 million yuan, an increase of 11.1% over the same period last year, and a net profit of 770 million yuan, an increase of 45.0% over the same period last year. The year-on-year growth rate of non-return net profit is higher than that of the same period last year, mainly due to higher non-recurrent profit and loss in the same period last year. From January to September 2019, the company's profit and loss on the disposal of non-current assets was 460 million yuan, mainly due to the confirmation of compensation for demolition of subsidiary products metals.
Cost and expense control is good. From January to September 2020, the company's operating cost was 281.96 billion yuan, an increase of 14.9% over the same period last year; gross profit margin was 2.8%, an increase of 0.2% over the same period last year; and net profit was 1.2%, down 0.1pts from the same period last year. In the third quarter of 2020, the company's operating cost was 107.83 billion yuan, an increase of 20.0% over the same period last year; gross profit margin was 3.3%, an increase of 0.9pts over the same period last year, and an increase of 0.6pts from a month earlier.
In terms of expenses, from January to September 2020, the company's sales expense rate was 0.6%, which was basically the same as the same period last year; the company management expense rate was 0.6%, a decrease of 0.1pts compared with the same period last year. Overall, the company's expense rate is 1.5%, which is about 0.2pts lower than the same period last year. In the third quarter of 2020, the company's sales expense rate was 0.6%, which was basically the same as the same period last year, with an increase of 0.1pts compared with the same period last year; the company's management expense rate was 0.6%, which was basically the same as the same period last year, with an increase of 0.1pts.
From January to September 2020, the company's net operating cash flow was-6.87 billion yuan, down 316.1% from the same period last year.
In the third quarter of 2020, the company's net operating cash flow was-580 million yuan, down 133.7% from the same period last year.
Cash received from the sale of goods and services totaled 335.85 billion yuan, an increase of 13.5 percent over the same period last year, with a cash recovery rate of 115.7 percent. In addition, the company continues to increase capital expenditure. During the reporting period, the company's capital expenditure was 1.96 billion yuan, with a growth rate of 88.5%. In terms of monetary funds, the balance of the company's monetary funds at the end of the reporting period was 17.48 billion yuan, an increase of 28.5% over the same period last year. In terms of accounts receivable, the balance of accounts receivable of the company at the end of the reporting period was 10.73 billion yuan, an increase of 25% over the same period last year, and accounts receivable accounted for 12% of current assets. In terms of capital structure, the company's asset-liability ratio at the end of the reporting period was 73.4%, an increase of 2.5pts over the same period last year.
According to the announcement, the company plans to split the products of its subsidiary company, Huaneng, to be listed on the main board of the Shanghai Stock Exchange, and build it into an independent listing platform for energy and environmental protection businesses, including coal circulation, cogeneration, sludge treatment, comprehensive utilization of biomass, and so on. Product Ring Energy is expected to enhance financial strength through listing financing, increase capital investment, improve the level of comprehensive utilization of resources, and become a green and efficient energy comprehensive service provider.
[investment advice]
It is estimated that from 2020 to 2022, the company's operating income will be 379.88 billion yuan / 426.52 billion yuan / 462.35 billion yuan respectively, with a year-on-year growth rate of 5.8%, 12.3% and 8.4% respectively, and the company's net profit will be 2.99 billion yuan / 3.47 billion yuan / 4.14 billion yuan respectively, with a year-on-year growth rate of 9.5% 16.0% 19.2%.
EPS is 0.59 yuan / 0.69 yuan / 0.82 yuan respectively, corresponding to the previous stock price, PE is 7.8times / 6.7times / 5.6times respectively. As the leader of supply chain integration service in China, the company has advantages in capital cost, risk control, management mechanism and so on.
[risk Tip]
Macroeconomic recovery is not as good as expected.
The comprehensive financing cost increased faster than expected.
The salary growth of staff and workers exceeded expectations.