The income of the PPP project has increased significantly, and the comprehensive gross profit margin has improved. The company issued a performance forecast on January 28, which is expected to achieve a net profit of RMB 2.26-244 million in 2020, an increase of 270% and 300% over the same period last year. The main reasons are as follows: the company's pre-construction PPP project has entered the operation period, the project revenue increased by about 78 million yuan compared with the previous year; last year, the goodwill provision of 66.85 million yuan was made, and there was no corresponding goodwill impairment this year; the company accelerated the acceptance and audit of the completed project, the final examination result of the project was satisfactory, and the comprehensive gross profit margin was higher than that of the previous year.
Research and development investment continues to increase to consolidate the company's moat. In the first three quarters of 2020, the company invested 59 million yuan in R & D expenditure, and the R & D expenditure rate was 3.93%, an increase of 2.10% over the same period last year. Through the establishment of R & D base and increased investment, the company's scientific research capability has been greatly improved. By June 2020, the company has 42 scientific research projects and 13 self-designed scientific research projects, covering ecological restoration, ecological big data construction and many other fields; 2 national standards, 1 industry standard and 24 local standards have been issued. Two industry standards and 32 local standards are being prepared, and a total of 195 patents have been applied for.
The improvement of scientific research capability has consolidated the company's technical moat.
Sign a strategic cooperation agreement to expand mine ecological restoration business. The company announced in November 2020 that it plans to set up a joint venture with Huaneng Yangtze River Environmental Protection Technology Co., Ltd., Huaneng Inner Mongolia East Energy Co., Ltd., relying on their respective advantages, to further promote the transformation and application of scientific research achievements. carry out all-round cooperation in mine management projects. This strategic cooperation is conducive to the expansion of the company's mine ecological restoration business and plays a positive role in promoting the company's production and operation.
The state has vigorously promoted the construction of the ecological environment and issued a number of policies. The National Master Plan for Major ecosystem Protection and Restoration projects (2021-2035), issued in June 2020, makes it clear that in 2035, through the vigorous implementation of major ecosystem protection and restoration projects, ecological protection and restoration work will be strengthened in an all-round way, and the state of the ecosystem has fundamentally improved. The Guide to the Ecological Protection and Restoration Project of Landscape, Forest, Field, Lake and Grass (trial), issued in August 2020, comprehensively guides and standardizes the implementation of ecological protection and restoration projects in various places, and promotes the integrated protection and restoration of mountains, rivers, forests, fields, lakes and grasses.
As the country attaches importance to ecological restoration, the company's future performance is expected to usher in a new growth point.
Cover for the first time, giving the company a "buy" rating. It is estimated that the growth rate of the company's homing net profit from 2020 to 2022 is 295%, 44%, 40%, 0.11, 0.18, 0.27 yuan. (note: dividends on preferred shares are deducted when calculating EPS)
Risk hint: the PPP project does not advance as expected, and the performance forecast and valuation judgment fall short of expectations.