报告名称：Sino Great Wall(000018)Pioneer in going global; double engines to drive fast gro
报告类型：点评报告
报告日期：2015-12-17
研究机构：中金公司
股票名称：神州长城,神州B
股票代码：000018,200018
页数：4
简介：Investment positives
Sino Great Wall is a leading company in public decoration in China, ranking 8th among “China Building DecorationIndustry Top 100 Enterprises” in 2014. It enjoys strong brand influence, excellent execution and improving incentivemechanism. We expect its net profit to maintain fast growth in the coming three years.
A pioneer in going global to see fast growth in overseas market. It is one of the first decoration companies togo global and has established sound reputation by leveraging its integrated strength in civil engineering construction,decoration, electro-mechanics and curtain wall system, as well as its good project management. New overseas ordersgrew fast and reached Rmb77mn/1bn/5.7bn in 2012/13/14. The fat gross margin and sound payment collection ofoverseas business could lend solid support to earnings growth. We expect overseas business to continue growing swiftlyas construction of overseas marketing network advances and bottleneck of L/G is removed after backdoor listing.
Domestic expansion to accelerate with active exploration of medical and solar construction business. Asconcentration in the decoration sector is set to rise in the L-T, the company’s domestic decoration business is likely tokeep growing via M&A and cross-region penetration. It also plans to explore medical PPP projects and solar farmconstruction going forward and develop new growth engine with its improved financing strength after backdoor listing.
Improving incentive mechanism and ample momentum for market cap management. All senior executiveshold a stake in the company by participating in financing. The company also announced ESOP Phase I for medium-levelmanagement and core staff, and may roll out Phase II and Phase III in the future, conducive to incentivizing employees.
Financials
We forecast 2015~17e net profit growth at 91%/49%/38%. We expect 2015~2017e revenue to rise50%/36%/31% to Rmb4.1bn, Rmb5.6bn and Rmb7.4bn, and net profit to rise 91%/49%/38% to Rmb358mn,Rmb533mn and Rmb737mn, implying EPS at Rmb0.80, Rmb1.19 and Rmb1.65.
Valuation and recommendation
Initiate with BUY and TP at Rmb47.7 (32% upside) based on 40x 2016e P/E (0.9x PEG) consideringoutstanding growth potential and execution. Potential catalysts include: 1) overseas orders; 2) capital market operationlike private placement and M&A; 3) fast earnings growth; 4) ESOP; 5) further loosening in domestic real estate andmonetary policy. Risks: uncertainty in overseas market; weak investment in China.

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