China State Construction Corporation (603018): Steady performance and profit improvement Improve the front-end of the industrial chain to benefit from the strategy of strengthening the transportation power

China State Construction Corporation (603018): Steady performance and profit improvement Improve the front-end of the industrial chain to benefit from the strategy of strengthening the transportation power

Matters: The company released the third quarter report for 2019. The first three quarters achieved operating income of 27.

4.5 billion, an annual increase of 4.

07%; realize net profit attributable to shareholders of listed companies 2.

9.2 billion, an annual increase of 20.

49%; net profit deducted from non-attributed mothers2.

60 ppm, an increase of 16 in ten years.

29%; achieve basic EPS 0.

64 yuan.

Revenue growth was short-term, and net profit attributable to mothers increased steadily.

In terms of revenue growth, the company Q1?
Q3 revenue achieved multi-year growth rate of +4.

07%, a year-on-year growth rate (+63.

37.
) (37%) fell back, resulting in faster revenue growth or mainly due to the high base of last year’s engineering contract business revenue; quarterly, Q1?
Q3 achieved revenue growth respectively.

83%, 0.

86%, -11.

2%, of which the growth rate of 2019Q1 revenue is higher than the same period of the previous year, the growth rate of 2019Q2 revenue is faster than the same period last year, and the revenue growth of 2019Q3 is a substitute.

In terms of net profit growth, the company Q1?
In Q3, net profit attributable to mothers increased by +20 per second.

49%, compared with Q1 2018?
Q3 growth (+35.

17%), mainly due to the vertical growth in revenue during the period.

The growth rate of net profit is much higher than the growth rate of revenue, or due to the change in business structure, the revenue share of the low-margin engineering contracting business has decreased, while the growth rate of taxes and expenses has decreased compared to the same period of the previous year.

By quarter, Q1?
In Q3, the growth rate of net profit attributable to mothers was 29 respectively.

07%, 20.

02%, 14.

36%, of which the second quarter, the third quarter exceeded the growth rate compared to the same period last year.

In the first three quarters, gross profit margin, net profit margin increased, and E ROE improved: The company’s comprehensive gross profit margin for the third quarter reported reached 31.

92%, an increase of 1 over the same period last year.

An average of 77, from the analysis of the undertaking business and the revenue structure in the first half of the year, it is judged that the proportion of engineering business with a reduced gross profit margin decreased.

In terms of period expenses, the expenses for the first three quarters were 15.

70%, an increase of 0 compared with the same period last year.

29 pct, of which the increase in research and development expense rate increased by 0.

86 pct.

In terms of net interest rate and ROE, the net interest rate increased by 1.

53 pct to 10.
90%, mainly because the company’s gross profit level has increased.

The total initial asset impairment loss and credit impairment loss are 1.

200,000 yuan, slightly higher than the same period last year.

The current ROE (expected) is 11.

30%, an increase of 0 compared with the same period last year.

38 pct, mainly due to the increase in net interest rate.
Operating cash increased, monetary funds surplus decreased, accounts receivable increased, and asset-liability ratio decreased slightly: In terms of cash flow, the company’s net cash flow from operating activities in the first three quarters was -3.

5.3 billion, an increase of 21 every year.

73%, or due to an increase in cash flow from purchasing and employee compensation payments; net cash flow from investing activities was zero.

7.6 billion, the previous inflow increased by 116.

30% is mainly due to the redemption of democratic wealth management products; the net cash flow from financing activities is -1.

29 ‰, an increase of 143 per year compared with the same period last year.

37%, mainly due to the decrease in long-term average company expenses, dividends and share buybacks.

In terms of monetary funds, the company’s monetary fund balance at the end of the period was 6.

7.7 billion, down 37 from the beginning.

48%, mainly due to the increase in the annual budget and purchase payments generated at the same time and the increase in cash from financing activities.

In terms of accounts receivable, the company’s accounts receivable in the first three quarters was 40.

9.8 billion, an earlier increase of 14.

12% was mainly due to the increase in business scale.

In terms of capital structure, the company’s assets and liabilities were reorganized at the end of the reporting period61.

36%, a decrease of 0 from the same period last year.

67 pct, mainly due to the decrease in short-term earnings of short-term companies; such as checking the asset-liability ratio after excluding advance receipts, it was 47 at the end of the third quarter.

49%.

Plenty of orders and strong performance guarantee, the front end of the industrial chain will preferentially benefit from the strategy of a strong transportation country.

In the first half of 2019, the company undertook business value of 40.

30,000 yuan, an increase of 18 in ten years.

83%, which is close to the mid-2018 total revenue level, accounting for 62% of the new business undertaken in 2018.

33%, sufficient orders and strong performance guarantee.

In September of this year, the Outline for the Construction of a Powerful Country for Transportation was released. Infrastructure space needs are released. The speed of landing of infrastructure projects in the field of transportation may accelerate.The integration of the capital market relies on the characteristics of planning and design to develop in a one-stop direction of the entire industrial chain. It is at the front of the industrial chain and benefits first.

In addition, the company expands its business endogenously and undertakes major transportation planning projects in multiple places. Following the promotion of the country ‘s stable growth policy, the company gradually wins in the transportation engineering design consulting and construction market in the central and western regions through the out-of-province layout and territorial operation.Share.
At present, the company’s share repurchase is progressing smoothly. As of September 30, 2019, the company has repurchased 2,507,064 shares, accounting for 0% of the company’s current total share capital.

5398%.

The repurchased shares will be used for employee shareholding plans. According to the “Phase 1 Employee Shareholding Plan” announced on March 27, 2019, an employee shareholding plan will be implemented for no more than 140 employees with a scale of no more than 31 million yuan., Showing confidence in the company’s future development, 杭州桑拿网 will effectively motivate employees to help the company develop.

Investment suggestion: The company’s revenue for 2019-2021 is expected to be 58.

7.8 billion, 80.

5.3 billion and 107.

100 million US dollars, the annual growth rate was 40.

0%, 37.

0%, 33.

0%; net profit growth was 35.
1%, 28.

1%, 26.

0%; EPS are 1.

16 yuan, 1.

50 yuan and 1.

88 yuan, dynamic PE is 9 respectively.
7 times, 7.

5x and 6.

0 times, PB is 1.

7 times, 1.

5 times, 1.

2 times.

We are optimistic about the company’s national layout strategy and performance flexibility in the field of transportation engineering and the increase in the proportion of future investment in the engineering consulting industry.

Maintain BUY-A investment rating with 6-month target price of 16.

9 yuan, equivalent to 14 in 2019.

5 times expected P / E ratio estimate.

Risk reminders: the risk of severe macroeconomic fluctuations; the scale of infrastructure investment; the loss of staff; the risk of increased competition in the industry.