Longma Sanitation (603686): Service orders broke 10 billion gross profit margin, cash flow doubled, performance stopped rising, and trend turned back

Longma Sanitation (603686): Service orders broke 10 billion gross profit margin, cash flow doubled, performance stopped rising, and trend turned back
Event: Longma Sanitation Announces Third Quarter Report of 19: The company achieved revenue of 30 in the first three quarters.24 ppm, an increase of 21 in ten years.74%; net profit attributable to mothers1.99 ppm, rising by 0 every year.11%, continued to rise 7% sequentially.64%. In the first three quarters, the company won an annual contract amount of 10 for sanitation service projects.110,000 yuan, the total contract amount is 103.9.3 billion. Opinion: Analysis of income statement: steady growth in revenue, single quarter net profit is close to the highest in history, performance continues to improve on a sequential basis, and the trend of stopping the decline and rising is transformed.In the first three quarters of 2019, the company achieved 30.24 ppm, an increase of 21 in ten years.74%; net profit attributable to mothers1.99 ppm, rising by 0 every year.11%, up 7 from the previous month.64%. The reason why the growth rate of net profit was lower than the growth rate of revenue was mainly due to the rapid development of sanitation service business and the increase of service personnel in the first three quarters, and sales expenses and management expenses increased by 37, respectively.54% and 50.24%, plus the use of funds to increase funds at the end of 17 years, bank deposit interest income decreased, the company’s financial costs also changed from negative to positive, the increase of the three expense ratios together caused net profit growth to be less than profit growth.However, since 2019, the company’s three quarters of net profit increased significantly in the third quarter. Net profit attributable to its mother was 76.12 million yuan in the third quarter, which was close to the highest level in historical single quarter performance.establish. Breakdown of business analysis: Sanitation equipment revenue has increased slightly, sanitation service revenue has increased rapidly, and gross profit margin has increased steadily.In the first three quarters, the company achieved revenue from sanitation equipment17.53 ppm, an increase of 0 per year.92%, accounting for 58 of the main business income.50%; Sanitation operation business income12.44 ppm, a 72-year increase of 72.47%, accounting for 41 of main business income.50%; the company’s comprehensive gross profit margin is 25.35%, rising by 0 every year.62 points.The company’s main business, the sanitation equipment business, has grown steadily, the sanitation service business is growing rapidly, and the revenue share has been increasing. The gross profit margin of equipment and services has continued to increase in the first three quarters, and the overall gross profit margin level can also be improved.Due to the relatively high initial gross profit margin of sanitation service projects and the stable operation of existing projects, the gross profit margin of sanitation service business is expected to continue to increase. Looking at business development in terms of order growth: sanitation equipment market share remains the top three, sanitation industry service orders have grown rapidly, and waste sorting projects have been rapidly deployed at the same time.In the first three quarters of 2019, the company ranked among the top three in the sanitation equipment industry and its market share was reset5.10%, the environmental sanitation innovative products and high-end operating vehicles have obvious competitive advantages, increasing market share by 10.34%.In addition, sanitation service orders showed an explosive growth trend, and the annual contract amount of sanitation service projects was awarded in the first three quarters.110 thousand yuan, the total contract amount is 103.93 ppm is the first company with a total contract value exceeding 10 billion yuan this year.And the company’s waste sorting business orders are also being rapidly deployed. Since 2017, the company has gradually won 32 waste sorting projects in Xiamen, Wuhan, Tianjin, Longyan and other regions, with a cumulative contract value of 4264.500,000 yuan, including 3723.The 120,000 yuan project (13) was awarded in 2019, and the company won the bid in Tianjin Beichen District (1282杭州桑拿网) on August 31.500,000 yuan) and Wuqing District (425.700,000 yuan) garbage classification project has become another new achievement in the layout of the garbage classification business.The company’s equipment sales business related to waste sorting and shipping related products also grew faster than the industry average growth rate of this type of products. It can be seen that the rapid promotion of this year’s waste classification policy has brought new cash flow to the company’s related businesses.Analysis: Cash return warmed up, and the cash-to-cash ratio increased significantly.In the first three quarters of 2019, the company’s cash rebate situation has obviously improved, and the company has sold goods and provided cash services28.60 ppm, an increase of 48 in ten years.21%, the cash-to-cash ratio is 0.95, 0 compared with the same period last year.78 markedly improved, and the ability to collect funds was significantly enhanced.The company’s net operating cash flow also increased from -6 in the same period last year.2.1 billion potential narrowed to -3.2.7 billion.The improvement in cash flow comes from the company’s strengthening of the management of cash collection. In addition, the proportion of orders from government customers in the first three quarters increased, and the cash flow situation continued to pick up. Profit forecast and investment advice: The company is a leading company in the sanitation industry. Benefiting from the marketization of sanitation services and the promotion of waste classification policies, the rapid growth of sanitation services will become the company’s bright spot in the future.As of now, the annual contract amount of the company’s hand sanitation service project is 25.06 million, the total contract amount is 249.7.2 billion. Sufficient growth of orders in hand can be expected.At the same time, we judge that the high-end of sanitation equipment will become an increasingly clear market trend. In the future, the proportion of high-end industries will gradually increase, and the company’s overall city share in the industry is expected to increase.We estimate that the company’s attributable net profit for 2019-2021 will be 2 respectively.64, 3.07, 3.39 trillion, EPS is 0.63 yuan, 0.74 yuan, 0.82 yuan, corresponding to the current sustainable 18 respectively.1, 15.6, 14.1x, rated as “strongly recommended-A”. Risk reminders: The marketization of the industry is less than expected, the advancement of waste classification policy is less than expected, and the risk of receivables recovery.