工程板块的不利影响已近消除，2023 年业绩有所修复。公司发布业绩预告称，2023 年预计实现归母净利润-3500 ~ -5000 万元，较2022 年有所改善。推测工程板块的不利影响或基本消除，一方面体现为资产质量的改善，合同资产、应收账款等减值风险较高的资产占比持续下降，2023年预计计提减值损失约0.6 亿元，较2022 年减少约1.3 亿元。另一方面体现为业绩质量的提升，2023 年上半年实现经营活动现金净流入0.6 亿元，自2019 年以来持续高于净利润规模，对应净现比达8.1。Report summary:
The strategic transformation is beginning to bear fruit. Since the strategic transformation in 2020, the company has promoted the concentration of resources in the main design business, carefully accepted engineering orders, extended the layout of the soft decoration business, and fully exploited the economic benefits of design brands. In 2023, the company signed a new contract of 1.63 billion yuan, of which the design/engineering/soft decoration business accounted for 60%/20%/20% respectively, and the business restructuring has begun to bear fruit.
The soft decoration business empowers front-end design, or further strengthens the high-end design moat. (1) The soft decoration business can effectively solve the problem of design product implementation, collaborate with the design and engineering sectors to form an overall solution for interior decoration services, and build a high-end design moat. (2) The customer base of the soft decoration and design business has a high degree of integration. As the support rate increases, it can effectively revitalize the company's high-quality customer resources and contribute new performance growth points. (3) The company launched the intelligent material platform “Zhaocai Cloud Library” to link front-end design and back-end materials, or improve design efficiency, and promote the soft decoration business into a fast track of growth. In the second half of 2023, the soft decoration business signed a new order of 190 million yuan, a year-on-year increase of 70.2%. In addition, the 2023Q4 design business signed a new order of 300 million yuan, an increase of 1.8% over the previous year. The order has taken the lead in breaking out of the inflection point.
The negative impact of the engineering sector has almost been eliminated, and the 2023 results have been repaired. According to the company's performance forecast, it is expected to achieve net profit of -3,500 to -50 million yuan in 2023, an improvement over 2022. It is speculated that the adverse effects or basic elimination of the engineering sector are reflected, on the one hand, in the improvement in asset quality. The share of assets with a high risk of impairment, such as contract assets and accounts receivable, continues to decline. In 2023, impairment losses are estimated to be about 60 million yuan, a decrease of about 130 million yuan compared to 2022. On the other hand, this is reflected in the improvement in the quality of performance. The first half of 2023 achieved a net cash inflow of 60 million yuan from operating activities, which has continued to be higher than the net profit scale since 2019, corresponding to a net present ratio of 8.1 million yuan.
Initiate share buybacks, demonstrating management confidence. The company issued an announcement stating that it plans to use 50 to 100 million yuan of its own capital to repurchase shares, and it is estimated that 372 to 7.44 million shares can be repurchased, accounting for 1.37% to 2.73%. The purpose of this repurchase is to promote the sustainable and healthy development of the company and protect the rights and interests of the majority of shareholders. On the one hand, it provides financial support for the company's stock price, and on the other hand, it highlights the management's positive expectations for the company's operations and fully boosts investor confidence. Furthermore, the repurchased shares will later be used in equity incentive plans or employee stock ownership plans, which will further strengthen the company's long-term incentive mechanism.
Give it a “buy” rating. The company is an international leading enterprise in the field of interior design. With the optimization of the business structure, performance has been repaired; soft decoration is also expected to achieve rapid growth with the support of design-side traffic, and has long-term investment value. Considering that the company's performance repair progress is slightly slow, the 2023-2025 EPS was adjusted to -0.14, 0.30, 0.52 yuan, and the corresponding 2024-2025 PE was 17.8 or 10.3 times.
Risk warning: Project repayment risk, software business development falls short of expectations, performance falls short of expectations
