Design Institute (603357) Annual Report 2018 Review: High Performance Increases Significantly Improves Profitability, Cash Flow Hits New Record

Design Institute (603357) Annual Report 2018 Review: High Performance Increases Significantly Improves Profitability, Cash Flow Hits New Record
Event: The company released its 2018 annual report and achieved annual revenue of 16.4.9 billion, an increase of 20.04%, achieving net profit attributable to mother 4.3.7 billion, an increase of 51.23%, achieving a deduction of 4.200 million, an increase of 47.14%; Q4 performance exceeded expectations and achieved rapid growth to demonstrate performance. There are abundant orders on hand and new signings are expected to improve.Q4 achieved revenue 4.7.4 billion, down 14.9%, with a decrease of 127pp and a decrease of 46pp; return to 0.8.9 billion, a decrease of 23.The growth rate was 95%, with a decrease of 249pp and a decrease of 117pp.Profitability expansion in the quarter, gross profit margin 42.8% decrease by 3.2pp, ring minus 9.2pp; period rate is 12.28% increase by 2.2pp, ring increase by 0.6pp; net interest rate 18.64% decrease by 2.3pp, 11pp loop reduction.Judging that the marginal deterioration of performance is due to the rapid expansion of the business, the customer’s progress payment lagging behind the company’s expenditure, and the new vertical single replacement (gradual new signing 18).400 million YOY-20%).The growth rate of initial revenue / attribution is still as high as 20% / 51%, and the growth rate of attribution is gradually increasing3.7pp, demonstrating performance strength.End-of-hand order 29.600 million, 1 of the income for the correct period.8 times, the new signing in the future is expected to benefit from the recovery of infrastructure and the integration of the Yangtze River Delta business opportunities; significantly improved profitability, record high cash flow, and continued decline in yield.Gross profit margin 47.51%, the same increase of 4.3pp, is on the first step among listed infrastructure design companies, higher than China Design Group (26%), Surveying Shares (40%), and other design giants such as Suzhou Jiaotong Technology. It is judged that the company has significant regional business advantages, And the scale efficiency and labor cost growth rate (6%) is much lower than the revenue growth rate; sales / management / finance / period rate3.35% (+0.8pp) / 9.11% (+1.1pp) /-0.48% (-0.4pp) / 11.98% (+1.5pp); impairment of 0.7.3 billion yuan decreased by 21%, accounting for 15% of net profit decreased to 16.81; Investment income 0.1.6 billion with an increase of 5.1x; tax rate is 15.42% reduction of 2pp, because some subsidiaries obtained 15% preferential tax rate for emerging companies; net interest rate was 26.48% increase by 5.5pp; cash ratio is 81.88% (+7.4pp) / 52.68% (+5.4pp), operating cash flow 2.5.7 billion yuan increased by 120%, which was due to high sales receipts; the rejection rate was 30.66% reduction of 2pp, which is at a high level among listed design companies; “a group of two chains” strategic layout of the industrial chain, rapid expansion of business outside the province.The company has expanded the incremental and existing markets around the design and construction and monitoring and repair of the two industrial chains, forming a design / inspection 南宁桑拿 / consultation / management diversified business sector, which has realized revenue13.200 million / 1.8.3 billion / 0.85 billion / 0.5.9 billion, accounting for 80% / 11% / 5% / 4% respectively, with a gross profit margin of 52.77% / 24.77% / 31.32% / 23.31%; actively expand business outside the province, report the establishment of Shenzhen, Subei, Hunan, Southwest Branch, merged in succession, foreign aid projects entered the African market, resulting in a provincial / external income of 13.04 billion / 3.4.3 billion, an increase of 18.8% (-48pp) / 25.3% (+ 36pp), accounting for 79% (-1pp) / 21pp (+ 1pp), with a gross profit margin of 53.91% / 23.1%, the rapid expansion of business outside the province, estimated that the gross margin level adjustment outside the province is the inherent regional barriers to business and the early expenditures of cross-regional operations, and the continuous restoration through business improvement; profit forecast and investment rating: the company is expected to achieve business in 2019-2021The income is 20.6.9 billion, 24.8.4 billion, 28.700 million; net profit attributable to mothers is 5.4.9 billion, 6.6.7 billion and 7.8.7 billion; EPS is 1.69 yuan, 2.05 yuan and 2.42 yuan, the corresponding PE is 12 respectively.8X, 10.6X and 9X.Covered for the first time and given a “Recommended” rating. Risk reminders: 1. Social investment is less than expected; 2. Market competition risk; 3. Financial risk.