Main points of investment
Event: the company released its annual report for 2017. In 2017, the operating income was 1.04 billion yuan, an increase of 102.9% over the same period last year, and the net profit was 170 million yuan, an increase of 137.2% EPS0.5 yuan over the same period last year. Excluding Zhengzhou Water Affairs and Zhongwei International, the company achieved an operating income of 860 million yuan in 2017, an increase of 67.8% over the same period last year, and a net profit of 140 million yuan, an increase of 92.8% over the same period last year.
The performance increased significantly, and the eco-tourism landscape business promoted the performance growth: the company's revenue in 2017 increased by 102.9% compared with the same period last year, and the eco-tourism landscape business contributed to the increase in income. Ecotourism landscape income was 290 million yuan, up 217.2%, accounting for 27.7%; municipal garden income was 270 million yuan, up 29.8%, accounting for 26.0%; road greening income was 280 million yuan, a slight increase of 52.0% over the same period last year, accounting for 27.3% Due to the new Zhengzhou water conservancy projects, pipeline sales, consulting services business income totaling 160 million yuan, accounting for 15.4%; because the combined table Zhongwei International increased design income by 20 million yuan. The company is actively transforming to the construction of ecological landscape, benefiting from the construction of ecological civilization, and it is expected that eco-tourism landscape will continue to contribute considerable revenue increment to the company in the next few years.
Profitability has improved significantly, and cash flow has been greatly outflowed: the company's gross profit margin in 2017 was 32.0%, down 0.3 percentage points from the same period last year; and net profit was 18.3%, up 4.2 percentage points from the same period last year. During the period, the expense rate was 8.9%, down 4.1% from the same period last year. Among them, because the management fee was lower than the income growth rate, the management expense rate decreased by 1.8%, and the financial expense rate decreased by 2.4% due to the increase in the use of raised funds instead of bank borrowings. The sales expense rate is basically the same as the previous period. Operating cash flow-70 million yuan, a decrease of 100 million yuan compared with 30 million yuan in the same period last year, mainly due to the expansion of the scale of the project and the increase in purchase money and deposit paid for the project.
The industrial chain of eco-environmental construction has been gradually improved, and the cross-regional management capacity has been further improved: in 2017, the company completed the acquisition of 60% of Zhengzhou water resources, obtained the first-class qualification of general contracting for water conservancy and hydropower projects, and further improved the layout of ecological environment construction. And Zhengzhou water and the company's ecological environment construction of the main business has a strong synergistic effect on the company's external expansion of business has a positive impact. The company's cross-regional operating capacity has been further improved. Due to the acquisition of Zhengzhou Water Affairs and Zhongwei International, the income of Central China and Southwest China has increased by 360 million yuan and 4 million yuan respectively. In the future, the company will continue to accelerate the layout of the whole industry chain and the strategic depth of nationalization through epitaxial mergers and acquisitions, and the business field and scope will be further expanded.
The newly signed orders increased significantly, and the business structure continued to optimize: in 2017, the company signed new orders of 2.64 billion yuan, a substantial increase of 354.8% over the same period last year, and the annual newly signed orders were 2.6 times of the company's 2017 revenue. Abundant newly signed orders will form a good support for the company's future performance. The company's business structure has been continuously optimized, and the total proportion of newly signed eco-tourism landscape and municipal garden projects has reached 97.5%. In the context of building a beautiful China, it is expected that the subdivided areas of the project will continue to be prosperous.
Profit forecast and rating. The company recently released a draft equity incentive plan under the condition that the growth rate of performance from 2018 to 2020 will be 80%, 70% and 50% respectively, fully demonstrating the company's confidence in future performance. It is estimated that the EPS from 2018 to 2020 is 0.92,1.59 and 2.40 yuan respectively, and the corresponding PE is 14 times, 8 times and 5 times. With reference to the average valuation level of the garden industry, the company is valued 18 times in 2018, corresponding to the target price of 16.56 yuan, with a "buy" rating for the first time.
Risk hints: the progress of the project may fall short of expectations, business development may not be as expected, the risk of extension of M & A, and the risk that the performance of M & An enterprises may be less than promised.