Incidents:
On the evening of April 14, the company released the 2020 performance report and the performance forecast for the first quarter of 2021. In 2020, it achieved operating income of 3.764 billion yuan, a decrease of 1.42% over the previous year; it achieved net profit of 148 million yuan, a decrease of 5.15% over the previous year. 2021Q1 achieved net profit of 2203-26.94 million yuan, an increase of 1054%-1311% over the previous year
Commentary:
Affected by the pandemic in 2020, high growth is expected to be achieved in '21. There are two main reasons for the decline in the company's 2020 performance: first, due to the impact of the epidemic, business volume has declined, and the second is that the company plans to prepare for impairment of various assets by about 100 million yuan in 2020, which will reduce net profit attributable to parent company owners by 857.107 million yuan in 2020. However, the company overcame the impact of the pandemic in 2021, performed well in the first quarter, and is expected to achieve high growth throughout the year.
The number of orders is sufficient to guarantee future performance. The amount of new orders signed by the company in 2020 was 4,070 billion yuan. On a quarterly basis, they were 545/10.43/1368/1,114 billion yuan respectively. Except for Q1, which was affected by the epidemic, the order amount for the remaining three quarters was over 1 billion yuan. Sufficient order volume lays a good foundation for the company's future performance.
Focus on R&D innovation to improve long-term competitiveness. After years of technological innovation, the company has developed and applied for nearly 50 BIM and prefabricated decoration technology patents, and obtained nearly 20 BIM and prefabricated decoration technology patent certificates. As of the end of June 2020, the company had a total of 155 patented technical achievements with independent intellectual property rights, including 20 invention patents, 131 utility model patents, and 4 design patents; the company's layout and enhanced intellectual property protection capabilities enhanced long-term competitiveness.
In line with “carbon neutrality”, the construction photovoltaic business ushered in new opportunities. As a clean energy source, photovoltaic power generation plays a huge role in achieving the goal of “carbon neutrality” in China. Building photovoltaics has the characteristics of local consumption and has developed rapidly in recent years. The company's main business is specialized construction and design characterized by building decoration, and has had successful experience in roof photovoltaic construction projects. In the context of “carbon neutrality”, this business is expected to enter a new cycle of growth.
First coverage, giving the company a “buy” rating. The company's EPS for 2020-2022 is expected to be 0.39/0.52/0.68 yuan. Combined with the valuation of comparable companies, the company was given 15 times the PE, corresponding target price of 7.80 yuan, coverage for the first time, and the company was given a “buy” rating.
Risk warning: Risk of order repayment falling short of expectations and performance predictions and valuation judgments falling short of expectations