Core ideas:
The overall growth rate of Q3 has slowed down, which is expected to be mainly affected by the increase in costs brought about by the rush to work after the epidemic, and the growth rate of Q4 performance is expected to pick up. According to the company's three-quarter report for 2020, 20Q1-3 realized operating income of 1.854 billion yuan, an increase of 19.15%, a net profit of 156 million yuan, an increase of 7.38%, and a non-return net profit of 149 million yuan, an increase of 4.09%. From a quarterly point of view, the growth rate of the company's Q1/Q2/Q2 revenue is-3%, respectively, and the growth rate of home net profit is-2%, respectively, and the growth rate of net profit is-2%. The growth rate of Q3 income is stable and the performance has slowed down, which is mainly due to the increase in the cost of the company caused by the early epidemic, which leads to the rush of the project in the later stage. In addition, considering the low base of 19Q4 performance (mainly due to the high impairment of the company due to the rapid business growth in 19 years), the growth rate of 20Q4 performance is expected to improve (revenue growth in 20 years is slower than that in 19 years, and the amount of impairment is expected to decrease).
Q3 cash flow improved while gross profit margin fell, Q4 orders are expected to pick up to support future growth. The gross profit margin / net profit margin of the company's 20Q1-3 is 14.15% and 8.43% respectively, which is different from that of 19Q1-3-1.98/-0.93pct. In terms of cash flow, the net operating cash flow of the company 20Q1-3 was 15 million yuan, a decrease of 24 million yuan over the same period last year, of which the net operating cash flow of Q3 was 74 million yuan, an increase of 13 million yuan over the same period last year. In terms of expense rate, the expense rate of the company during 20Q1-3 is 3.79%, which is 0.46% less than that of 19Q1-3. The management (including R & D) / sales / financial expense rate of 20Q1-3 is 2.97%, 0.63% and 0.2%, respectively, and 0.06/0.09/0.31pct is reduced compared with 19Q1-3. In addition, according to the announcement of the company's operating data in the third quarter, the company 20Q3 newly signed orders of 443 million yuan, the number of newly signed orders is relatively general, but 964 million of the company has won the bid but has not yet signed orders, this kind of projects are expected to sign in Q4 and form new orders to support the company's future growth.
Profit forecast and investment advice. As the company increases its share of customers, it is estimated that the company's net profit for 20-22 years will be 2.29 yuan, respectively, with a year-on-year growth rate of 25.0%, 37.4% and 31.2%, respectively. The reasonable value of 63.47 yuan per share and the "buy" rating will remain unchanged.
Risk tips: major customer cooperation and development of new customers are not as expected; fine decoration development is not as expected.