The company recently announced its latest annual report and quarterly report, saying that the company's operating income in 2018 was 2.395 billion yuan, an increase of 22.3 percent, while the net profit returned to its mother was 69 million yuan, down 12.69 percent from the same period last year. The company's Q1 revenue in 2019 was 454 million, with a decrease of 10.84%, and its net profit was 29 million, with a decrease of 19.31%. In addition, the company recently expects revenue to grow by 10% in 2019 compared with the same period last year. The comments are as follows:
The new order signed by the company in 2018 shrank strategically, and the high order on hand provides a certain guarantee for future performance.
Against the backdrop of deleveraging and strict government borrowing regulation in 2018, the overall capital availability of the industry was significantly affected, and the growth rate of new orders signed by the company slowed, with a total of 2.415 billion new orders signed, down 18.85 per cent from the same period last year. Among them, 1.609 billion of new official clothes and 755 million of fine residential decoration have declined to varying degrees, or related to the company's strategic contraction in a tightening environment, the company has tried its best to reduce the risk of expansion. at the same time, improve the quality of money back (net operating cash flow improved significantly in 2018). The order growth rate of Q1 company increased significantly in 2019, with newly signed orders of 1.063 billion, significantly higher than the same period last year, accounting for about 44% of the newly signed orders at the end of March, accounting for 3.084 billion of the newly signed orders at the end of March, which is about 1.29 times of 2018 revenue, providing a certain guarantee for revenue growth in the later period.
The performance increased steadily in 2018, and home decoration became the "second pillar" of the company's performance in 2019.
In 2018, the company completed an operating income of 2.395 billion yuan, an increase of 22.31%. Of these, public clothes are 1.334 billion, with an increase of 6.7%; home furnishings are 930 million, with an increase of 33.54%, with a share rising to a five-year high (38.75%). The business structure is more balanced, improving the risk resistance and profitability of the business portfolio. It is expected that with the improvement of the liquidity of real estate companies in 2019 and the gradual increase in downstream concentration, the company's home decoration business is expected to contribute more marginal business increments. The revenue growth rate of Q1 company decreased by-10.84% in 2019. Recently, the company announced that operating revenue in 2019 is expected to grow by 10% Murray 30% compared with the same period last year, and the company is expected to continue its steady growth trend for the whole year. The company's gross profit margin was 12.65%, down 0.24 percentage points from the same period last year. Of this total, public clothes were 12.09%, down 0.37%, and home furnishings were 13.74%, up 0.35%.
The management and R & D expenditure rate of the company has increased significantly, and the performance is expected to improve gradually last year in 2019.
The expense rate during the company period was 6.63%, an increase of 1.22% over the previous value, mainly due to a significant increase in the rate of management and R & D expenses. Among them, the sales expense rate was 1.38%, which was basically stable; the management expense rate was 3.81%, an increase of 0.62%; the financial expense rate was 0.96%, an increase of 0.15%; and the R & D expense rate was 0.48%, a significant increase of 0.41%. The main reason is that since the listing of the company, the company has made efforts to promote the R & D construction of assembly decoration system and the upgrading of other business technologies, so that R & D costs have increased rapidly. The company provides for an impairment of assets of 19 million yuan, a decrease of 16 million compared with the previous value. The company's net interest rate was 2.87%, down 1.15 percentage points from the same period last year. In 2018, the company made a net profit of 69 million yuan, down 12.69% from the same period last year. In 2019, Q1 was 29 million, with a decrease of 19.31%.
The company's operating cash flow has improved significantly, and the expansion of qualifications is expected to further enhance the order-taking capacity.
In 2018, the company's income-to-cash ratio was 0.9637, down 2.02%; in the same period, the cash-to-payment ratio was 0.9577, down 11.53%. Taken together, the net cash flow generated by operating activities in the same period was 63 million, an increase of 152 million over the previous value (from negative to positive). In 2018, the company acquired 66% stake in Fujian Mindong Construction Engineering to further improve the type of qualification of the company, and promote the company to move forward from an integrated architectural decoration service provider to a construction general contractor. We believe that with the acceleration of the integration of resources in the upper and lower reaches of the industrial chain and the gradual promotion of residential fine decoration business, the company is expected to usher in new development opportunities.
Investment suggestion
With the contraction of the industry credit environment in 2018 and the increase of the company's R & D investment, the growth rate of the company's return net profit has declined. With the marginal improvement of the downstream liquidity environment, the company's high-level on-hand orders are expected to be gradually transformed, thus supporting the steady growth of the company's performance.
We believe that the company's R & D investment at the initial stage of listing and the extension of the industrial chain are expected to significantly enhance the company's ability to take orders in the future. We are optimistic about the development of the company, and it is estimated that the EPS in 2019-2021 will be 0.45, 0.55 and 0.66 yuan per share (due to the tightening of liquidity in 2018, the company's order taking is lower than expected, so the previous forecast is lowered. The forecast values before 2019-2020 are 0.70,0.91), corresponding to PE22/18/15 times, maintaining the "buy" rating.
Risk hint: the growth rate of investment in China is accelerating, and the promotion of home decoration business is not up to expectations.