East Garden return rate 3 years down 50% Anshan big single deposit worries

After August 26, despite the removal of the right, although the "first high-priced stock" hat, but Oriental garden (002310.　　SZ) But once again made a "victory" to the trading board return its investors. In the first half, sales grew 111%, net profit rose 158%, and outstanding earnings performance opened investors ' rosy expectations for the company's high growth.　　However, is it really that good? Oriental Gardening is government business, according to the company in the prospectus, "the majority of customers for the higher credibility of the government departments or their infrastructure investment and large state-owned enterprises."　　But these government-backed clients seem to be bringing a financial crisis to Oriental Gardens.　　Company 5 ~ August with four local governments signed a total of 3.486 billion yuan of municipal greening project agreement, however, through the in-depth analysis of Anshan project, we worry that the final implementation of these agreements may have greater difficulties. In terms of valuation, the market gives Oriental gardens such a high price-earnings ratio, the company's current market share of only 0.5%, the growth of huge space. However, the Oriental Garden, which focuses on the municipal gardens, needs to compete with the greening companies under the landscaping department. Willing to cushion capital is the company's largest, but this can not constitute long-term competitiveness.　　In contrast to the valuation level of the company's Palm Gardens, the current stock price of Oriental Gardens is at least 30% overvalued. Book funds difficult to fill the contract demand through the listing of funds, by the end of 2009, the book Capital of Oriental Garden from the listing of 96.12 million yuan soared to 840 million yuan, the company's capital situation greatly improved.　　However, after six months, that is, by the end of June 2010, according to the company's semi-annual report, its book funds from the beginning of the 840 million yuan and sharply reduced to 590 million yuan, the decline reached 29%.　　By contrast, in the first half of the year, Sales of Oriental Gardens surged 111% per cent year-on-year, while net profits rose by more than 158%, at a time when the sharp drop in book funding was puzzling. One side is the first half of the company's operating activities generated a net outflow of 165 million yuan, the net outflow over the same period of 10 times times. One side is the repayment of a large amount of debt, in a short period of six months, the net outflow of cash 250 million yuan.　　According to this net outflow speed, although the book Capital of Oriental Garden is nearly 600 million yuan, but the existence of capital crisis is not too much. Investors reported that the real financial crisis in Oriental Garden comes from two aspects: one is to provide customers with a large amount of engineering cushion capital, occupy the company a large amount of funds. Second, the project is more difficult to increase the cash.　　Despite the completion of the issue of fund-raising, the company book funds sufficient, but long-term income will cause serious financial crisis. At present, Oriental Garden in order to compete with competitors in the Municipal Garden project to win, to provide customers with 30% of the project investment funds. The impact of cushion capital on financial results is that when the sales revenue is confirmed by the progress of the project, there is no corresponding cash inflow, which can only confirm the accounts receivable, and if the customer proceeds in advance and pressesProject progress to pay the contract, the company confirmed that the accounts receivable will be reduced accordingly. And a share market another garden listed company-Palm Garden, its main business is the real estate garden, the company almost nonexistent for the customer cushion fund situation, its customer pays the contract money the way is: General agreement for the contract to pay the contract price after the 10%~20% as an advance;　　The progress payment shall be paid to the 70%~80% of the project cost according to the project progress confirmed by the two parties, and shall be paid to 80%~90% after the completion and acceptance, and the 90%~95% to the contract price after the settlement, and the remaining 5%~10% balances to 100% after the expiration of six months to two years.　　In other words, palm Garden in the course of the project, you can recover 70%~80% contract income, and according to the current situation of Oriental garden, the company not only needs to advance 30% of the total cost of the project, the completion of the settlement can only recover 50% of the total price of the project, the remaining 50% will need to be resumed in a longer Comparing the accounts receivable of these two companies, the investor newspaper found that the share of Palm garden accounts receivable accounted for 2007-2009 year by year, to 25.83% in 2009, while this index of Oriental garden was reduced from 31.4% to 27.41% in 2008,　　But by 2009, it has increased significantly to 33.56%.　　To advance the project for customers, has become an oriental garden for the Municipal Garden project an advantage, in the current just completed the fund-raising situation, the financial strength can be guaranteed, but the continuous cash outflow ultimately can not guarantee the long-term existence of this advantage. According to the disclosure, in May this year, Oriental Garden and Datong Garden Greening Construction Management Service Center, Hebei Zhangbei People's government, Anshan City Construction Investment Development Co., Ltd. signed Urban Landscape Project cooperation Agreement or contract, the total price is 1.2 billion yuan, 240 million yuan, 1.6 billion yuan, accumulated 3.04 billion yuan.　　August 6, the company bulletin and the Hengshui People's government signed Kettle Yang City Section 446 million Yuan landscape engineering cooperation agreement.　　Thus, from May to August, the total price of the municipal garden projects obtained by Oriental Gardens reached 3.486 billion yuan. However, if 30% of the contract is paid for these projects at the same time, the total capital demand will reach 1 billion yuan, and the company will not be able to afford it.　　Even without the need to make advances, companies will face huge financial pressures.　　The rate of return three years down 50% if investors believe that because the Orient Garden customers are government departments or other state-owned enterprises, they have a high reputation, so the company does not exist the risk of return, it is wrong.　　The difficulties in the return of Oriental gardens are objective and are reflected in the financial results.　　The investor newspaper calculates how much the Oriental landscape has been selling since 2007, that is, the amount of cash received by sales is divided by current sales, reflecting the ease with which the company sells its money back. The results show that the company's sales ratio is a rapid and sharp decline in the situation, 2The 007-2009 years were 89.11%, 76% and 52.67%, respectively, to the first half of 2010, which fell substantially to 39.66%, less than half the 2007 level.　　In view of Palm Gardens, 2007-2009 years, the company's sales to the current ratio of 82%, 87.5% and 89.6%, not only presents a good trend of the year to improve, from the absolute value, Palm Garden 2009 close to 90%, far higher than the Oriental Garden, showing outstanding sales of the ability to return money.　　The investor reported that there were two main reasons for the deterioration of the East Garden's ability to return money: first, at a certain point of view, a large number of cushion funds in the objective to increase the balance of receivables, reduce the ratio of cash; but more importantly, there is also a risk of default on the accounts receivable of the Government or its affiliated state enterprises.　　At present, due to the "gets going" of the 4 trillion infrastructure investment, the local governments at all levels are in debt, the local debt risk is reborn, the local financing platform is also widely implicated, in this case, whether the government can pay the municipal garden projects in time, it really needs to play a question mark.　　Not only that, but the new leader may not be willing to pay for his predecessor's huge greening projects once the leadership of the relevant government departments has been replaced. The worries of the financial payment in Anshan according to the contents of the company announcement, the four large orders signed in May-August, in addition to the Datong Garden Greening Construction Management Service Center signed the project contract, the remaining three items are the form of agreement, did not form a statutory contract.　　Therefore, the actual implementation of the project and the actual total price of the project still have great uncertainty.　　Among them, and Anshan City Investment Company's agreement total price reached 1.6 billion yuan, is the highest price in 4 projects, the company's profitability has a significant impact. Through the Anshan Finance Bureau announced the 2009 budget performance and 2010 budget (draft) report, 2009 revenue continued to maintain a rapid growth trend, Anshan general budget income is expected to complete 12.3 billion yuan The general budget expenditure of Anshan in 2010 is 8.03 billion yuan, among which, the salary and welfare expenses are arranged 1.95 billion yuan, the expenditure of goods service is 610 million yuan, the special expenditure arrangement is 5.47 billion yuan, and the support to agriculture, science and technology and education continues to increase.　　Focus on ensuring social security and other livelihood causes of capital needs.　　In the Special fund arrangement of 5.47 billion yuan, the expenditure related to municipal gardening is 2.027 billion yuan for urban and rural community affairs. In addition, according to the "Anshan Environmental protection" Eleven-Five "planning and the 2020 Vision planning Framework" disclosure of information, in the city "XV" in the five years,　　For the construction of urban environmental infrastructure investment of 4.296 billion yuan, but the garden greening project investment of only 322 million yuan, accounting for the urban Environment infrastructure construction investment of 7.5%, considering the coherence of the budget, the future for municipal greening expenditure on the ratio is not expected to occur too much change. According to the announcement, the Anshan project will commence construction from 2011, if the annual50% of the proportion of the payment, Anshan need in 2011 and 2012 from Urban and rural Community affairs special expenditure arrangements to take out 800 million yuan to the Oriental Garden to pay the project price. Assuming that Anshan's expenditure on municipal greening does not change much in the year 2011-2012, if the city is to pay 800 million yuan for the Oriental Garden contract in 2011 years, it means that the urban and rural community spending arrangements will grow at least 5 times times the 2010 basis,　　Clearly there is a loss of coherence and stability in the budget of government expenditure. The investor newspaper also noted that Anshan city construction investment and Development Co., Ltd. just on May 5, 2010 issued a total of 2 billion yuan of corporate debt, but this 2 billion yuan has been specified for use, and not for municipal garden projects, specific to: 1.6 billion yuan for the Anshan Nansha River (Water River) comprehensive renovation project,　　Anshan Lishan District East Shahe Dangerous Old room renovation project and Anshan vocational education base construction project, the remaining 400 million yuan to supplement the company's operating capital. After the release, Anshan City Investment company's assets and liabilities rate reached 67%, with the national local investment and financing platform to clean up, the government will no longer to the city investment company loans, bank new loans will be unusually cautious.　　As the most important city infrastructure construction investment and financing platform, the City Investment company undertook a large number of old urban reconstruction and Urban road network construction projects, investment expenditure is huge. Anshan　　Accordingly, the investor newspaper believes that the Anshan project agreement in the Oriental Garden may have greater difficulties in implementation, which will impact on the growth of the company's business.　　Valuations are at least 30% per share of the August 25 closing price and diluted earnings, the Oriental Garden rolling P/E (TTM) is 115 times times, Palm garden is 87 times times, the valuation is lower than the former 24%.　　The reason why investors are willing to give Oriental gardens higher valuations is based on two reasons: first, compared to the Palm garden, which is mainly engaged in the real estate gardening business, the municipal gardening Business of Oriental Garden has higher profit margin level; second, the market growth prospects of municipal gardening business are good. 2009, Oriental Garden's main business gross profit margin is 32.9%, but the Palm garden only 26.62%, is lower than the former 5.28%, the disparity is more obvious.　　From the net sales rate, the Palm garden is 11.77%, while the Oriental Garden is 14.34% and 2.57% higher. This shows that the Oriental Garden's municipal gardening business does have a higher level of profitability.　　More precisely, the profit margin of the real estate garden is lower, because the project of the municipal garden obtains the non-competitive means such as the network connection, the valet cushion capital, but the real estate garden project obtains is more needs to bid wins, exists under the competition situation the natural gross margin lower some. However, in the long run, the competitive edge in the business environment is more reliable and trustworthy.　　Although the way to get government projects will not change, this does not improve the competitiveness of enterprises. As for growth prospects, both the real estate and the municipal gardening business areMixed。　　At present, China's landscape market pattern is extremely dispersed, the number of companies, even the industry leader, Oriental Garden and palm garden in the domestic garden market share of only about 0.5%, so the growth of space, this is the two companies common "hi".　　For the real estate gardening business, China's urbanization construction is in the ascendant, rigid demand continues to grow, the real estate industry will still have a very large growth space, but at the same time, because the real estate market is also suffering from the government's stringent regulatory policies, real estate enterprises to start and construction area of the risk of a sharp decline, which will affect the　　For the municipal gardening business, China's urban greening rate is much lower than the international average level, in a harmonious and sustainable social construction requirements, the municipal garden business has a lot of growth space, however, the government at all levels of our country at present facing the severe test of local debt, the investment in municipal gardening business bottlenecks. This shows that the two major garden business are "long-term gratifying, short-term worry", this is common ground.　　However, Palm gardens are actually more advantageous in future business growth. According to the disclosure, Palm Garden has been with poly Real estate, Qixia construction and other property companies to establish a continuous business partnership, this relationship will continue, the future of these customers in the real estate projects, Palm Garden is more likely to be.　　And the municipal gardening Business of Oriental garden is more opportunistic one with local government, and the business is less sustainable. As a result, the investor newspaper argues that Palm Gardens should have a higher valuation level from the sustainability of business growth, as well as 87 times times earnings. Therefore, it is not that palm garden valuation is low, but the Oriental garden valuation is too high, its reasonable valuation level is at least 87 times multiples below, that is, reasonable share prices should be on the basis of the current share price cut by about 30%.