Matters: The company released its 2016 annual report, realizing an operating revenue of 392 million yuan, up 18.06% year on year, and a net profit attributable to shareholders of the listed company of 62 million yuan, up 21.68% year on year; EPS 1.07 yuan/share, a year-on-year decrease of 6.14%, is proposed to distribute cash dividends of 2.5 yuan (tax included) for every 10 shares, and it is proposed to increase 10 shares for every 10 shares. The company released its first quarter report and achieved an operating revenue of 99.038 million yuan, up 8% year on year; The net profit attributable to shareholders of the listed company was 9.6496 million yuan, up 11.35% year on year; EPS 0.16 yuan/share, up 14.29% year on year.
The revenue and profit grew steadily, and the trend continued to rise in Q1 2017: in 2016, the company realized a year-on-year growth of 18.06% and 21.68% respectively in operating revenue and net profit attributable to shareholders of listed companies, and the performance continued to grow steadily. The steady growth of the company's operating revenue was mainly due to a year-on-year growth of 18.55% in architectural design revenue, which accounted for 89.17% of the company's revenue ratio; The growth rate of the company's net profit was slightly higher than the growth rate of operating revenue, mainly due to the increase in the proportion of the company's landscape design business revenue, which improved the company's gross profit margin by 0.55 percentage points in 2016. The company's cash flow from operating activities in 2016 was 102 million yuan, up 245.08% year on year, mainly because the company's ability to collect payments from downstream customers was strengthened during the reporting period, and the cash received from selling goods and providing services increased by 30% year on year, which was greater than the year-on-year growth of the company's operating income. In Q1 2017, the company's revenue and net profit increased by 8%/11.35% year on year. The better growth of revenue in the first quarter was mainly due to the factors of consolidated Beijing and Shenzhen Bilod (the parent company's revenue was 71.0771 million yuan, an increase of 0.45%; the subsidiary's total revenue was 18.9609 million yuan, an increase of 50.34%). The company's Q1 revenue increased by 8% in 2017, 4.3 percentage points higher than the growth rate of 3.70% in 2016 Q1 revenue. It is expected that the rising trend will continue in the later period.
Extensive M&A was launched to help the extension of the industrial chain: in 2016, the company used part of the IPO to raise cash and its own funds to acquire 51% of the shares of Shenzhen and Beijing respectively, with a total transaction consideration of 133 million yuan. The acquisition had completed the industrial and commercial change procedures in October November 2016, and the consolidated statement was completed in November 2016. Shenzhen BLUD and Beijing BLUD promise that the non net profit deducted from the merger in 2016-2018 will not be less than 20 million yuan, 25 million yuan and 30 million yuan respectively; In 2016, Beijing Bilod and Shenzhen Bilod merged to realize a net profit deduction of 24.617 million yuan, and the completion rate of performance commitment was 123.09%, which was good. Bilod is a high-end brand of domestic interior decoration design and a well-known brand in the field of interior design and planning design of high-end star hotels and office buildings. This acquisition will help the company's business model extend from architecture and landscape design to high-end interior design. In the future, the company plans to further strengthen mergers and acquisitions, integrate high-quality resources in the industry, and extend the industrial chain upstream and downstream.
Introduce strategic investor Tus Investment to accelerate business expansion relying on resource platform: in July 2016, the company's controlling shareholder Sidi Investment plans to increase capital and share, and introduce strategic investor Tus Investment, which will hold no more than 27% of the equity of Sidi Investment; On March 10, 2017, the company name was changed to "Tus Design". Tus Investment is a subsidiary of Tus Holding Co., Ltd. Tus Holding is a comprehensive large enterprise established by relying on Tsinghua University, holding shares in more than 500 listed and unlisted enterprises such as Tus Guhan, Tus Sound, 21Vianet, Beikong Clean Energy, and Puhua Environmental Protection, with total assets of more than 100 billion yuan. The company's introduction of strategic investors this time is expected to rely on the comprehensive resource platform of Tus Holdings to accelerate the nationwide layout and business expansion.
Follow the strategy of Xiong'an New Area and layout new urbanization construction: The company follows the national strategy of coordinated development of Beijing, Tianjin and Hebei, Xiong'an New Area construction, etc. At present, the branch office in Beijing is about to complete registration. In the future, the company will give full play to its experience in the construction of Suzhou Industrial Park and its advantages in the construction of science and technology parks, and comprehensively carry out business in Beijing and surrounding areas. According to the "13th Five Year Plan" for the Development of Building Energy Efficiency and Green Buildings issued by the Ministry of Housing and Urban Rural Development in March 2017, it is required to comprehensively promote building energy efficiency and green buildings. The company plans to seize the important strategic opportunity of the country to promote new urbanization and green buildings, give play to the company's technical advantages in building energy conservation and green buildings, and become a beneficiary of green building promotion and an integrator of industry resources.
Investment suggestion: increase shareholding - A investment rating, with a six-month target price of 74 yuan. In February 2016, the company was listed on the Shenzhen Stock Exchange. In the first year of listing, the company made extensive M&A, helping the industrial chain extend to high-end interior design; The controlling shareholders introduce strategic investors, which is expected to accelerate business development relying on the comprehensive resource platform. In June 2016, the equity incentive plan was implemented, covering 9% of the company's employees and targeting middle management and technical personnel, which is conducive to stimulating the subjective initiative and creativity of the company's management team and core business backbone. We are optimistic about the company's development prospects. It is estimated that the company's revenue growth rate from 2017 to 2019 will be 12.0%, 11.8% and 12.1% respectively, and the net profit growth rate will be 46.7%, 12.5% and 13.8% respectively; For the first time, the investment rating of "overweight - A" was given, and the six-month target price was 74 yuan, equivalent to the dynamic P/E ratio of 50 in 2017.
Risk tip: the landing of raised investment projects is not as expected, the implementation of Xiong'an New Area strategy is not as expected, and the landing of extension M&A is not as expected.
