The performance exceeds expectations and the incentive plan stimulates dividends.
The company announced a pre-increase in performance in 2017, realizing a net profit of 1.42-176 million yuan belonging to shareholders of listed companies, while YoY+97%-145%; realized deducting non-net profits of 1.42-176 million yuan, YoY+103%-153%. New contracts signed by the company increased rapidly in 2017, laying a good foundation for follow-up performance. The company discloses the draft restricted stock incentive, the performance appraisal target YoY+80%/70%/50% for 2018-2020. We are optimistic about the high growth of the company's performance and maintain its "buy" rating.
Orders are full, focusing on eco-tourism landscape and municipal gardens
The company recently disclosed some major operating data for 2017. In the fourth quarter of 2017, the company signed a new project of 404 million yuan, YoY+110.7%. In 2017, the company signed a new project of 2.64 billion yuan, YoY+354.8%. The company's newly signed projects are mainly eco-tourism landscape and municipal gardens (accounting for 97.5% of the company's newly signed projects in 2017), in line with the policy of Beautiful China.
The on-hand order is progressing smoothly, and the strategic upgrading and nationalization layout are beginning to bear fruit.
The company's performance increased significantly in 2017, mainly due to the smooth progress of stock projects and newly signed projects. Bayannur City Linhe District Wetland Restoration and Protection Project EPC Project (989 million yuan), Danbei Town urbanization infrastructure construction and ecological environment improvement project (700 million yuan), Qingfeng County Kaizhou Road Ecological Greening Project (240 million yuan) and other major projects to achieve revenue. In addition, the company continues to promote strategic upgrading and national layout, actively carries out ecological engineering construction in provinces and cities around the dimensions of environmental protection, ecological landscape and cultural tourism, and continues to improve cross-regional management capacity and capital operation efficiency. Profitability is further improved. The company completed the acquisition of 80% of Zhongwei International and 60% of Zhengzhou Water, which was included in the consolidated statement on November 1, 2017.
Restricted stock incentive, higher exercise conditions, showing confidence in future performance
The company issued a draft restricted stock incentive plan on February 10, demonstrating its confidence in future performance. The incentive plan proposes to grant 10 million restricted shares, 8 million shares for the first time, and 2 million shares reserved. The restricted stock price granted for the first time is 6.08 yuan per share. The scope of the grant is relatively wide, encouraging 101 people for the first time, including company directors, executives, middle managers and core personnel. Restricted stocks will be subject to performance review and lifting of restrictions in 2018-20. The annual performance evaluation target is based on the net profit of shareholders belonging to listed companies after deducting non-profits in 2018, and the growth rate of net profit of shareholders of listed companies after deducting the effect of share payment fees and non-recurrent profits and losses in 2017-2020 is not less than 80%, 206% and 359% respectively, that is, YoY+80%/70%/50%..
17 years' performance exceeded expectations, high growth is expected in the future, and the "buy" rating is maintained.
The performance of the company's orders is good, and municipal gardens and tourism landscape orders account for a relatively high proportion, so the profit forecast is raised. It is estimated that the EPS in 2017-19 will be 0.45, 0.81, and the net profit of YoY+108%/80%/71%, in the next three years will be CAGR+86%. Compared with the original profit forecast, the adjustment rate is 2.4%, 2.5%, 26.3% respectively. At present, the overall average PE of the garden industry in the past 18 years is 14.9X. We believe that the company has full orders and good growth, so we can give it 18 years of PE18X-20X, adjust the reasonable price range to 14.58-16.2yuan, and maintain the "buy" rating.
Risk hint: the risk that the order is transformed into the risk that the income is lower than expected, and the performance of the target of extension M & A falls short of the expected risk.