Sino Great Wall Co Ltd:Profitability Growth Remained Steady,Revenue Growth to Accelerate

Company Profile

    Sino Great Wall Co., Ltd. provides engineering contracting, decoration, and mechanical and electricalinstallation services in China. It is also involved in the curtain wall design and construction, andinvestment and hospital construction activities. The company is based in Beijing, China.(Source: Bloomberg)

    Event

    Sino Great Wall (the company) released its Q316fiscal reports, showing company’s operating revenueleaped 10.87% YoY to CNY 3.2Bn, company’s operating profit ramped up 4.29% YoY to CNY 338Mn,company’s shareholder attributable net profit climbed 25% to CNY 303Mn, implying an EPS of CNY 0.18.

    Comments

    Sino Great Wall’s sales revenue increased by 10.87% YoY to CNY 3.2bn during 2016’s first three quarters.Company's sales revenue grew by 12.05%/-18.08%/53.22% respectively on YoY basis for Q1/Q2/Q3. Thenegative growth of Q216was mainly caused by high base of Q215. Q316’s glaring growth was mainlyattributed by the business expansion in overseas market. Value of company’s new obtained orders inoverseas market is about CNY 7.6bn by far. We estimate the value of company’s orders in hand toexceed CNY 18bn and expect the sufficient orders to lay solid ground for company’s futureperformance.

    Company’s profitability improved during the reporting period.

    For 2016’s first three quarters, company’s general gross margin inched up 4.52% YoY to 24.15%, its netprofit rate grew 1.03% YoY to 9.34%. Company’s gross margin improved respectively by4.61%/8.56%/0.72% in YoY perspective for Q1/Q2/Q3. Increased gross margin of overseas marketbusiness pushed up company’s gross margin, and the improved gross margin, lowered business taxfurther drove up company’s net profit rate.

    Company’s expense ratio increased during the reporting period.

    Due to higher administration expenses and financial costs, company’s expense ratio rose 5.06% YoY to9.95%. Other details are listed as below: