The 2020 and 1Q21 results are in line with the previous KuaiBao and forecast.
Lingnan shares announced its 2020 and 1Q21 results: revenue in 2020 was 6.65 billion yuan, a decrease of 16.4 percent over the same period last year, with a net loss of 460 million yuan, turning from a profit of 330 million yuan in 2019 to a loss of 330 million yuan. 1Q21 revenue was 890 million yuan, an increase of 197.5 percent over the same period last year, and a net profit of 16.25 million yuan, turning from a loss of 170 million yuan to a profit of 170 million yuan for 1Q20. 2020 and 1Q21 performance in line with the previous KuaiBao, forecast.
2020 Gross profit margin fell 9.1ppt to 14.6% year-on-year; R & D expense rate increased 0.7ppt year-on-year; sales / management / financial expense rate decreased by 0.5g; 0.3ppt; Asset impairment loss increased by 489% to 480 million yuan compared with the same period last year, mainly due to impairment of long-term equity investment of associated enterprises and goodwill impairment of subsidiary Demaji; net interest rate decreased by 11ppt to-6.9% year-on-year The net inflow of operating cash was 650 million yuan, which was 620 million yuan less than that of the same period last year; the net outflow of investment cash was 770 million yuan, and the outflow was 59.78 million yuan less.
1Q21 gross profit margin fell 5.2ppt to 15.7% year on year, 13.4 ppt lower than 1Q19; period expense rate was 21.8%, 3.2 ppt lower than 1Q19; net profit rate was 1.8%, lower 1.1ppt than 1Q19.
Trend of development
Income and gross profit margin are still under pressure. 4Q20 revenue fell 20.8% year-on-year, dint 1Q21 income increased year-on-year at a low base, but 1Q19-1Q21 CAGR was-9.5%, showing weak performance. For the whole of 2020, eco-environmental revenue fell 18.2% compared with the same period last year, while cultural tourism revenue fell sharply by 73.6%, which is a major drag on the company's revenue. In 2020, the company announced that newly signed orders totaled 7.85 billion yuan, an increase of 7.1% over the same period last year, but considering that orders fell sharply by 68% in 2019 compared with the same period last year, subsequent revenue growth may still be under pressure. In terms of profit margin, the ecological environment / water environment / travel gross profit margin fell 9.4/3.5/21.8ppt respectively in 2020 compared with the same period last year, which is under great pressure. We suggest that we continue to pay attention to the cost control of the company.
The net debt ratio increased compared with the same period last year, focusing on subsequent payback. In 2020, the company's net debt ratio was 55.7%, an increase of 8.6 ppt over the same period last year; the number of days of receivables + contract asset turnover reached 483 days, an increase of 87 days over the same period last year, and the project rebate slowed down. Considering that the company pays more attention to the project profit margin and cash flow, focusing on undertaking business in key cities such as Guangdong, Hong Kong, Macao and the Yangtze River Delta, we suggest that we pay attention to the follow-up cash flow improvement trend of the company.
Profit forecast and valuation
We maintain a net profit of 190 million yuan in 2021 and introduce a net profit of 210 million yuan in 2022.
The current share price corresponds to 0.95x 2021e Pamp B and 0.91x 2022e Pamp B. Considering that the company's cash flow is still under pressure, we cut our target price by 21% to 3.05 yuan, corresponding to 1.0 x 2021e Pmax B and 0.96x 2022e Pmax B, which has 6% upside compared to the current share price. Maintain a neutral rating.
Risk.
Revenue recognition was lower than expected, gross profit margin was under pressure, and net debt ratio continued to rise.
