The company released the 2020 annual report and the first quarterly report of 2021, with revenue of 3.57 billion yuan in 2020, a decrease of 11.5%, and a net profit of 350 million yuan, with a decrease of 1057.1% and a decrease of 1033.3%. 2021Q1's revenue was 790 million yuan, same as a decrease of 4.8%; the net profit returned to its mother was 8.81 million yuan, an increase of 38.5% EPS0.01.
Support the main points of rating
Asset impairment leads to losses and high debt ratio: corporate profits fluctuated greatly in 2020, due to a significant increase in corporate impairment due to stricter audit policies, with asset impairment and credit impairment of 0.7 (+ 420.1%) and 1.8 (+ 126.2%) yuan, respectively. The debt ratio is 69.6%. The expense rates of DJM 2020 and 2021Q1 are 15.4% (+ 2.7pct) and 14.2% (+ 2.1pct), respectively. High debt ratio and higher management fees have led to a decline in corporate profitability, with gross margin reduction rates of 0.1% (- 6.8pct) and 5.4% (- 3.4pct), respectively.
The order reserve is sufficient, pay attention to the cash flow occupation brought by the order: at present, the company accumulates 12.81 billion yuan on-hand order (106.0 for public clothes, 18.5 for home decoration, 360 million yuan for design), and the order income is Prida 3.6. There is still plenty of room for improvement in the future, but we should pay attention to the cash flow caused by the huge number of orders.
The sale of Sichuan Vocational and Technical College, thickening profits to alleviate the cash flow dilemma: the company recently sold Sichuan Vocational and Technical College, the price is expected to reach 750 million yuan, and will form an asset disposal income of about 250 million yuan, greatly increasing the profit in 2021. At the same time, it will obviously alleviate the company's cash flow dilemma.
It is suggested to pay attention to the compulsory redemption clause of the company's convertible bonds in 2021: the company still has 1.16 billion yuan of convertible bonds that have not been converted into shares, which will expire in June 2022. Considering the current situation of company operation and cash flow, the probability of convertible bonds triggering equity conversion in 2021 is high, so it is suggested that we should pay close attention to the progress of compulsory redemption provisions of convertible bonds.
Valuation
Considering the asset disposal income generated by the sale of Sichuan Vocational and Technical College, we adjust and raise our 2021 performance forecast but lower our 2022 forecast. It is estimated that from 2021 to 2023, the company's revenue will be 37.4,41.0 and 4.42 billion yuan respectively, the net profit will be 1.5,0.2,90 million yuan respectively, and the EPS will be 0.12,0.02,0.07 yuan respectively.
Major risks to rating
Accounts receivable are calculated for bad debts, the high debt ratio affects capital turnover, and convertible bonds cannot be converted into shares at maturity.