Main points of investment:

The company's net profit growth rate in 2020-25.4% 21Q1 net profit growth rate of 25.6%, basically in line with expectations. In 2020, the company achieved a total operating income of 10.79 billion yuan, an increase of 0.02% over the same period last year, and a net profit of 317 million yuan, a decrease of 25.4%. Of these, Q1/Q2/Q3/Q4 achieved revenue of 1.48 billion / 2.4 billion / 3.07 billion / 3.84 billion in a single quarter, up-25.0%, 12.8%, 10.0%, 17.4%, 55 million / 67 million / 124 million / 72 million, and-32.9%, 35.3%, 11.2%, 43.8%, respectively. The company's 21Q1 realized 1.93 billion yuan in revenue, up 30.6% from the same period last year (down 2.0% from the same period of 19Q1), and the net profit from its parent was 69 million yuan, up 25.6% from the same period last year (17.0% less than the same period of 19Q1).

The profitability of decoration business is improved. In terms of business, the operating income of architectural decoration projects was 6.68 billion, down 2.37% from the same period last year, the proportion of revenue decreased from 1.51pct to 62.0%, and the gross profit margin increased by 1.45pct to 15.26%. The operating income of curtain wall decoration projects reached 2.84 billion, an increase of 3.00% over the same period last year, the proportion of revenue increased by 0.77pct to 26.4%, and the gross profit margin decreased by 1.24pct to 10.6%. Intelligent system integration achieved business income of 684 million, an increase of 6.07% over the same period last year, accounting for 6.34% of the income; sales of decorative products achieved business income of 313 million, an increase of 20.4% over the same period last year; and design contracts realized business revenue of 176 million, a decrease of 6.61% over the same period last year. In the past 20 years, the operating income of the Internet business reached 57.11 million yuan, an increase of 4.61% over the same period last year, and the gross profit margin decreased by 7.02pct to 15.1%.

The 20-year comprehensive gross profit margin decreased by 0.1 pct compared with the same period last year, during which the expense rate (including R & D) increased, the amount of superimposed impairment increased, and under the comprehensive influence, the net profit rate of homing decreased 1.0pct. In 2020, the company's comprehensive gross profit margin decreased by 0.10% compared with the same period last year. When R & D expenses were added, the expense rate increased 0.24pct to 9.03% compared with the same period last year. Affected by the epidemic, the business hospitality, rental and office expenses decreased, resulting in a decrease in the sales expense rate of 0.26pct to 2.57%. Due to the increase in wages and depreciation and long-term asset amortization, the management expense rate increased by 0.29pct to 2.79%. The company increased its R & D investment, and the R & D expenditure rate increased by 0.39pct to 3.00% compared with the same period last year; the interest income increased by 10.54 million yuan compared with the same period last year, driving the financial expense rate down by 0.17pct to 0.67% year-on-year; the absolute proportion of the company's 20 credit and asset impairment losses in operating income increased by 0.54pct to 1.76% compared with the same period last year, and the company's parent net interest rate decreased to 2.94% year-on-year. 21Q1's comprehensive gross profit margin decreased by 1.01pct to 14.4% compared with the same period last year, the expense rate (including R & D) decreased to 12.9%, and the sales / management / R & D / financial expense rate was 4.76%, 4.75%, 2.61%, 0.76%, respectively, up 0.26pct/-0.50pct/0.28pct/-0.40pct. Credit and asset impairment losses achieved a positive contribution of 54.94 million yuan in the current period (20Q1 achieved a positive contribution of 29.9 million yuan). Under the combined influence, the net interest rate of 21Q1 homed decreased by 0.14pct to 3.59% compared with the same period last year.

Strengthen the overall planning of funds, the net expenditure of margin and deposit related to the project decreased compared with the previous year, and the cash flow improved compared with the same period last year. The net operating cash flow of the company in 2020 was 554 million, which was 126 million yuan more than the same period last year, mainly due to the reduction of 243 million yuan in deposit and deposit. For the whole year, the cash-to-cash ratio decreased by 6.48pct to 99.3% compared with the same period last year. With the implementation of the new accounting standards, bills and accounts receivable decreased by 7.25 billion, new contract assets increased by 7.47 billion, and contract liabilities increased by 128 million. Cash-to-cash ratio rose by 2.68pct to 75.0%, and bills and accounts receivable increased by 346 million compared with the same period last year. The net cash flow of 21Q1's operating activities was-1.08 billion, which was 36 million more than that of 21Q1. The cash-to-cash ratio rose by 14.1pct to 153.9% and the cash-to-cash ratio by 35.4pct to 186.6%.

Vigorously develop the EPC model, improve the assembled internal technology system, commercial operation is increasingly mature, is expected to enter a stage of rapid development. The company takes EPC, industrialization as the development direction, on the one hand, actively expand the EPC project, Zhoushan Guanyin Temple, Swan Lake Huawei Base, Lakeside University, Qianhai Kerry and other projects have been fully affirmed by the owners. On the other hand, since the start of assembled interior assembly in 2012, Asha has mastered a mature operation mode in industrial assembly, through the optimization and improvement of material end, production end, design end, construction end and so on, to achieve accurate control of the whole industrial chain of industrial assembly. The company creates three major industrial product platforms, including Keyi product platform, Kerui product platform and Keyu product platform, and develops hard product line, functional product line and intelligent product line. at present, it has promoted industrial assembly products to the market in all aspects from point to face. In 2020, the company completed 26 EPC projects and 40 industrial assembly projects.

The completion of the real estate construction is strong, and the post-cycle decoration business is expected to pick up. The company signed 16.2 billion yuan in newly signed orders in the past 20 years, an increase of 11.5% over the same period last year, including 9.78 billion for the public dress business, down 1.3% from the same period last year; 5.77 billion for the residential business, up 50.4% from the same period last year; and 236 million yuan for the decorative design business, down 6.7% from the same period last year. Decorative products sales business newly signed 413 million, down 22.8% from the same period last year. 21Q1 signed 4.89 billion new orders, an increase of 38.1% over the same period last year, including 2.93 billion for the public clothing business, up 38.6% from the same period last year, and 1.82 billion for the residential business, up 36.8% from the same period last year. By the end of March 21, the company had an order of 25.41 billion yuan, which is 2.36 times of the 20-year operating income.

Downgrade 21-22 profit forecast, add 23-year profit forecast, maintain "over-holding" rating: due to the impact of the epidemic, newly signed orders and execution are lower than expected, and downgrade 21-22 profit forecast. The company's 21-23 net profit is expected to be 381 million / 457 million / 571 million (the original value for 21-22 is 500 million yuan / 581 million yuan), with a growth rate of 20%, 20% and 25% respectively. The corresponding PE is 24XComp20XUnix 16X respectively, maintaining the "overweight" rating.

Risk hint: the promotion of assembled interior is not as good as expected.