Longyuan Construction (600491): Performance exceeded expectations and controlled PPP scale for stable operation

Longyuan Construction (600491): Performance exceeded expectations and controlled PPP scale for stable operation
This report reads: The company’s short-term performance is under pressure, but the company actively controls the scale of PPP and considers the implementation of PPP projects to help maintain its stable performance.The company has the advantages of the whole industry chain and professional team, and it still has the potential to deepen the PPP full cycle / full industry chain. Investment Highlights: Maintain overweight.Interim report total revenue for 2019 is 113.300 million / + 9.1%, net profit attributable to mother 4.4 billion / + 10.9% is lower than expected. Considering the financing and project construction progress expectations, the EPS is reduced to 0 for 2019-2021.66/0.80/0.91 yuan (previously 0.79/0.98/1.14 yuan), with a growth rate of 10/20/14%.Due to lower market preferences, the company was given a 15x PE estimate for 2019, and the target price was reduced to 9.9 yuan (originally 10.96 yuan). Q2 net profit increased negatively, gross profit margin increased, operating margin of net cash flow improved but remained under pressure.Report the average, 1) Q1 / Q2 revenue growth +8.3% / + 9.9%, the growth rate of net profit attributable to mother +21.1% /-1.5%, the negative increase in net profit attributable to the parent in Q2 was mainly due to the increase in taxes, financial expenses, impairment losses, etc. in the current quarter;4% (+0.3pct) / net margin 3.8% is flat for one year, with management and R & D expense ratios2.2% flat / finance rate 0.7% (-0.1pc), assets and credit losses 淡水桑拿网 account for 0% of revenue.6% (-0.1 point); 3) Net cash flow from operations -14.400 million marginal improvement (corresponding period of 2018-17).800 million), the cash ratio is 53.3% (+13.2pct) / cash ratio 60.8% (-2.9pct); 4) Asset-liability ratio 80.3% (+1.6pct) / +1 late 2018.0pct. The heavy PPP landing, light PPP scale expansion, the entire industry chain + professional advantages are conducive to stable performance. 1) New interim single 71 in 2019H1.700 million / -61% (PPP contract is 0) or mainly due to active contraction control risk, Q1 / Q2 new breakthrough single 31.5 (-42%) / 40.3 billion (-69%).At the end of the reporting period, the company won a total of 80 billion yuan in total bids for PPP projects (approximately 4 times revenue in 2018); 2) Six SPV companies (gradually 62) / receipt 3 were established in 2019H1.7.3 billion yuan, completed 11 PPP project financing approvals / amounts34.500 million, total financing withdrawal 42.8 billion (+42.5%); 3) The company utilizes the entire industry chain (one integrated two wings + N professional company) and professional advantages (more than 600 professional PPP teams), and still has the potential to deepen the PPP full-cycle business. Catalysts: Social financing data continued to improve, PPP regulations were promulgated, and financing rates continued to fall. Risk reminders: the degree of social melting, the centralization of policies to rectify PPPs, and the sharp rise in financing costs.

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