Event: the company released its annual report for 2022, with annual operating income of 980 million yuan, year-on-year + 1.8%, net profit attributable to shareholders 80 million yuan, year-on-year-11.4%, and diluted EPS 0.21 yuan.
The income of landscape design is growing rapidly, and R & D expenditure and credit impairment are a drag on net profit. The company achieved 980 million yuan in operating income for the whole year, + 1.8% year-on-year, and realized 80 million yuan in net profit attributable to shareholders,-11.4% in the same period last year. The decrease in net profit is mainly due to the improvement of the company's business refinement requirements, and increased R & D efforts in 2022. Research and development expenditure increased by 26.124 million yuan compared with the same period last year, and credit impairment loss increased by 26.197 million yuan compared with the same period last year. From the perspective of business, the growth rate of the company's construction business slowed down, with revenue of 929.275 million yuan, down 0.5% from the same period last year; revenue from landscape design business was 43.038 million yuan, up 49.5% from the same period last year; revenue from sales of seedlings and building materials was 2.973 million yuan, down 62.1% from the same period last year; and income from other businesses was 753000 yuan, down 30.2% from the same period last year.
We will increase the efforts to withdraw funds and improve cash flow. In 2022, the company achieved a gross profit of 314.361 million yuan, a year-on-year increase of 13.5%, a gross profit margin of 32.2%, a year-on-year + 3.3pp, a net profit rate of 8.1%, a year-on-year 0.8pp. From a business point of view, the gross profit margin of engineering business is 32.1%, year-on-year + 3.5ppm; landscape design gross profit margin is 34.7%, year-on-year-5.3ppp; seedling sales gross profit margin is 15.3%, year-on-year + 10.1pp. The expense rate during the sales period was 14.1%, which was + 3.0pp compared with the same period last year, mainly due to an increase of 5.299 million yuan in management expenses compared with the same period last year. The net cash flow generated by operating activities was-64.734 million yuan, an increase of 54.6% over the same period last year, mainly due to the fact that the increase in project rebate in 2022 was greater than that paid by suppliers. The loss of assets and credit impairment was 737.76 billion yuan, an increase of 16.675 million yuan over the same period last year. The cash-to-income ratio and cash-to-cash ratio are 86.3% and 69.6%, respectively.
Vigorously open up small and medium-sized cities, orders hit an all-time high. In 2022, the company won the bid and signed contracts for newly signed projects and design projects with a total contract value of nearly 2 billion yuan, a record high. The company has made great efforts to develop the target market of small and medium-sized cities and successively signed strategic cooperation agreements with the people's Government of Taihu County in Anhui Province, Yuanjiang County in Yunnan Province and Xianan District people's Government in Xianning City, Hubei Province. Business has expanded from Jiangsu Province to more than 10 cities outside Anhui, Guangxi, Guangdong, Yunnan, Shaanxi, Henan, Hubei and other provinces. With the gradual improvement of the company's local brand influence, it gradually forms a radiation effect on the surrounding areas, creating a good foundation for the company's stable performance improvement.
Practice the concept of "park city", create a city and a scene, and the business model shows a benign trend of development. The company practiced the concept of "park city" and put forward a five-in-one urban ecological environment promotion model of "water, road, green, landscape and city" in 2014, which abandoned the disadvantages of fragmented urban construction and could systematically improve the urban ecological environment, enhance the city image, change the original phenomenon of one side of a thousand cities, excavate culture, and create a city scene. In the process of promotion, this model has been generally praised by the managers of small and medium-sized cities, and has been successfully implemented in Shangri-La, Weixi County, Yuanjiang County, Si County, Anhui Province, Yunmeng County, Hubei Province and other places. The establishment of this business model helps the company to improve competitiveness, expand market scope, improve profitability and corporate performance, so the company invests more resources to develop design, increase R & D innovation and optimize and enhance construction capacity.
Profit forecast and investment advice. It is estimated that the company's net profit from 2023 to 2025 will be 92.2 million yuan, 110.1 million yuan and 125.8 million yuan. Comparable companies in the same industry have an average valuation of 22 times in 2023, giving the company 24 times PE in 2023, corresponding to the target price of 20.88 yuan, giving a "buy" rating for the first time.
Risk hint: macroeconomic downside risk, investment less than expected risk, market development less than expected risk.