Sichuan Road and Bridge (600039): Continued improvement in gross profit margin

Sichuan Road and Bridge (600039): Continued improvement in gross profit margin

Event: Sichuan Road and Bridge released its semi-annual report for 2019.

1H19 company income 176.

3 billion, a year-on-year increase of +13.

9%, net profit attributable to mother 7.

6 billion, a year-on-year increase of +59.

1%; of which 112 in 2Q19.

2 billion, a year-on-year increase of +6.

5%, net profit attributable to mother 4.

1 billion, a year-on-year increase of +13.


The growth rate of revenue declined in stages, and the gross profit margin continued to improve: 1H19 company’s revenue +13 year-on-year.

9%, the growth rate is reduced by 2 every year.

8pcts, single 2Q19 revenue +6.

5%, the growth rate is reduced by 9 every year.

2pcts, the periodical fluctuation of revenue growth rate is estimated to be due to the rhythm of the company’s on-hand project revenue confirmation. Considering the company’s on-hand project reserve, it is determined that there is room for improvement in the second half of the year.

1H19 company’s comprehensive gross profit margin 11.

3%, the same increase of 1.

8 pieces, of which 2Q19 comprehensive gross profit margin 10.

1%, the same increase by 1.

4pcts, continues the upward trend since 4Q18, and verifies the previous judgment.

In 1H19, the company’s net profit attributable to mothers was extended by 1.

2pcs to 4.

3%, of which the 2Q19 return to the net interest rate ceiling of the mother was flat at 2.


The changes in the net interest rate attributable to mothers mainly come from: 1) the reform of the compensation system and the increase in market development speed led to an increase in management expenses, which led to an increase in the expense ratios of 0 during 1H19 and 2Q19.

9, 0.

8 points to 7.

1%, 5.

5%; 2) Investment income from the transfer of Sichuan Shigo in the first quarter of 1919.

700 million (1H19, 2Q19 investment income as a percentage of income were 1.

4%, -0.

1%); 3) Changes in the provision for bad debts caused 1H19 and 2Q19 impairment losses to increase the proportion of income by 1 respectively.

0, 0.

3pct to 0.

1%, 0.


Judging that there is limited room for improvement in the management expense ratio, other factors are affecting the margins, and the net margin is expected to increase with the improvement of the gross margin.
The single-year growth rate in the new year has been shortened, and the repayment has been improved: the company’s newly-constructed construction project order amount from January to July 19 was 176.
5 billion, -61.

1%, mainly due to the overall decline in investment in transportation construction in Sichuan Province and the cautious bias of local government investment.

Taking into account the expected increase in the counter-cyclical adjustment of infrastructure, special debt documents are expected to improve the enthusiasm of local governments, and the road network planning of Sichuan and Chengdu is full of vitality. The new breakthrough in 2H19 growth rate will promote recovery.

A total of 413 new construction orders were signed in the past 12 months.

800 million, slightly more than 18 years of income, and future performance is relatively secure.

As of the end of 1H19, the company’s asset-liability ratio and interest-bearing debt ratio were 82.

4%, 48.

0%, change by +1.

6, -6.

0pcts, interest-bearing resistance continued to decrease; 1H19 company’s cash-to-cash ratio was 97.

7%, 99.

5%, change by +12 each year.

0, + 9.

8 cases, the gap between the current payment and the payment continued to narrow and the repayment improved.

Maintain “Buy” rating: The company is stable near the road and bridge construction leader in the southwest, and the regional infrastructure investment boom is still relatively high, which is beneficial to the company.

Maintain the net 北京spa会所 profit forecast for motherhood for 19-21 years14.



200 million, the current price corresponding to PE in 19-21 is 8x / 7x / 6x, maintain “Buy” rating.

Risk reminder: the prosperity of infrastructure investment in the southwest region declines, and the repayment is less than expected