Events:
The company publishes its 2018 annual report. During the reporting period, the company achieved revenue of 4.088 billion yuan and net profit of 525 million yuan, down 0.16% and 19.45% respectively from the same period last year, lower than expected.
The company released its quarterly report for 2019. During the reporting period, the company achieved revenue of 765 million yuan and net profit of 98 million yuan, down 24.58% and 15.44% respectively from the same period last year.
Main points of investment:
The overall scale of the business is stable, and the intensification of market competition leads to a decline in gross profit and lower-than-expected performance. In 2018, the company achieved operating income of 4.088 billion yuan, down 0.16% from the same period last year. Due to intensified market competition in the industry and increased costs of raw materials and labor services, the gross profit margin of comprehensive business was 28.67%, which was 0.75% lower than that of the same period last year. Although the company continues to recover business funds and reduce the scale of financing, in the context of financial deleveraging, the financing cost of the industry has risen, the company's financial expense rate has increased by 1.13 percent, and the financial expense has reached 260 million yuan. at the same time, due to the increase in the age of some receivables, the proportion of impairment losses increased, and asset impairment losses increased by 147.27% year-on-year to 99 million yuan. In the end, the company achieved a net profit of 525 million yuan, down 19.45% from the same period last year. The decline in revenue growth accelerated in the first quarter of 2019, while the gross profit margin fell slightly to 28.18%, resulting in a net profit of 98 million yuan, down 15.44% from a year earlier.
The collection efforts have been increased, and the cash flow situation has continued to improve. The company strengthened the collection of accounts receivable in 2018, and the net cash flow generated by operating activities reached 1.06 billion yuan, compared with 75.82 million yuan in 2017, and the cash flow of operating activities improved significantly.
The net cash flow of operating activities in the first quarter of 2019 was 355 million yuan, compared with-84.97 million yuan in the same period last year. At the same time, due to the reduction of project advances and the repayment of liabilities such as ultra-short financing during the reporting period, the asset-liability ratio decreased from 63.31% at the end of 2017 to 53.30% on March 31, 2019.
With the continuous extension of mergers and acquisitions, geographical and industry expansion, the company is still accumulating strength. In December 2017, the company subscribed for a 50% stake in Germany's Puri Maritime with 1.87 million in cash and cut into marine environmental protection. In February 2018, the company subscribed for a 10.93% stake in Beijing Bike Test Technology with 59.04 million yuan in cash. In April, the company jointly invested 100 million yuan with Guizhou Jinzhou Electric Power, Zhejiang Guanghan Environmental Protection and Shenzhen Yicheng to set up Guizhou Qingxin Wanfeng Energy Technology. In May, Xiongan fresh was established in Xiongan New area. In addition, in terms of business development, the company has also developed in the fields of zero discharge of waste water, flue gas water removal, industrial water treatment and so on. In April 2019, the company received notification from the controlling shareholder, Beijing Century and Holdings Co., Ltd., and the actual controller, Mr. Zhang Kaiyuan, that the company is planning an equity transfer and that it intends to transfer 25.31% of the shares of the company to the Guorun environment. it may involve the change of the controlling shareholder and the actual controller of the company. If the restructuring falls to the ground, the company is expected to join forces with state-owned enterprises.
Profit forecast and investment rating: according to the annual report, we lowered the company's 19-and 20-year forecast net profit by 5.15,5.41 (originally 6.60 and 726 million yuan), and increased the 2021 home net profit forecast of 567 million yuan, corresponding to the 19-year PE valuation of 19 times. The company is the leader of atmospheric smoke treatment, non-electric treatment still has room to maintain the "holding" rating.