Demand for real estate landscape has been strong. the pursuit of titles such as “Garden City” and “Ecological City” has pushed local governments to attach more importance on municipal landscapes.
According to CRI analysis, the regional distribution of the landscape industry is consistent with the economy of corresponding regions. In the developed southeastern coastal areas, there are a great number of landscape engineering companies and advanced municipal landscape. In other regions, the state of the landscape industry varies greatly across regions due to different levels of urbanization, economic growth and climates.
CRI market research shows that downstream clients in the landscape industry are mainly local governments and real estate companies. In general, the prosperity of the landscape industry is in accordance with macro-economic cycles.
Landscape engineering is heavily affected by weather because it involves outdoor operation and transplantation of plants. In northern China, winter is the slack season due to poor operation conditions. The climate in the south is quite moderate, so landscape engineering is not much affected throughout the year except for the period around the Spring Festival.
There are a lot of landscape companies in China. Each company gains a small share of sales revenue and covers a small area. The concentration rate of the industry is low. Whether a landscape company can operate cross-regionally depends on multiple factors, the key of which lies in abilities to undertake cross-regional businesses and to manage cross-regional projects.
The landscape industry is a typical capital-intensive industry. Players operate with light assets and external financing is difficult. Landscape engineering projects, especially governments’ municipal projects, are paid by contractors in installments, forcing companies to cover expenses for a long period of time. Their business expansion depends on the turnover of capital. Therefore, capital strength is the bottleneck impeding engineering companies from undertaking large engineering projects and expanding to the national market. As a result, landscape companies with strong financing capabilities are able to continue with business expansion and have stronger competitive advantages.
Currently, gross margins of municipal landscape projects are higher than those of real estate projects. The former usually involves longer periods of time and larger scales and requires companies to cover expenses with extended payoff period, resulting in high barriers and moderate competitions. By contrast, the latter involves shorter periods of time, smaller scales and shorter payoff periods, resulting in fierce competition and, consequently, lower gross margin.
The Chinese government has been promoting PPP (Public-Private Partnership) projects and infrastructure construction since 2016, bringing new opportunities for the landscape engineering industry. For the government, PPP will bring economic growth and alleviate the debt crisis. PPP is also good for social capital in that it expands enterprises’ investment scope and financing channels. With the engagement and support of the government, enterprises will receive higher credit ratings and therefore more easily obtain capital from financial institutions and subsidies from the government. Enterprises and governments are engaged in the entire process of PPP projects, especially post-operation and management. The construction industry is a typical capital-intensive industry with traditionally limited sources of capital. By contrast, PPP allows for more financing channels, which will hopefully relieve enterprises’ expenses burden and progress payment default.
In this report, CRI analyzes 15 landscape engineering companies listed in A-share market in China.
The report is composed of two parts: the first part is enterprise profiles and the second part is the operation status of these enterprises in the recent decade (presently 2006 to 2016, we will update it to the latest as time goes by).
The operation status is demonstrated from the following perspectives: (1) financial indexes, such as earnings per share, book value per share (BPS), sales per share, net cash flow per share, return on net worth and debt to asset ratio; (2) indexes on the income statement, such as revenue, operating profit, net profit and EBIT; (3) indexes on the income statement, such as revenue, operating profit, net profit and EBIT; (4) indexes on the balance sheet, such as liquid asset, fixed asset, current liability, non-current liability, capital reserve and shareholders’ equity.
(1) Financial Indexes
– Earnings per Share
– Book Value per Share (BPS)
– Sales per Share (SPS)
– Net Cash Flow per Share from Operations
– Net Cash Flow per Share (CNY)
– Return on Net Worth
– Net Profit Margin on Total Assets
– Return on Invested Capital (ROIC) (%)
– Gross Profit Margin on Sales (%)
– Net Profit Margin on Sales (%)
– EBIT Margin (%)
– EBITDA Margin (%)
– Debt to Asset Ratio (%)
– Total Asset Turnover (times)
– Cash/Operating Income Received from Sales of Goods or Services
– YOY Growth Rate of Operating Revenue (%)
– YOY Growth Rate of Operating Profit (%)
– YOY Growth Rate of Net Profit Attributable to Shareholders of Parent Company (%)
(2) Summary of Income Statement
– Gross Revenue (CNY, million)
– Total Operating Costs (CNY, million)
– Revenue (CNY, million)
– Operating Profit (CNY, million)
– Total Profit (CNY, million)
– Net Profit (CNY, million)
– Net Profit Attributable to Shareholders of Parent Company (CNY, million)
– Non-recurring Items (CNY, million)
– Net Profit Deducting Non-recurring Items (CNY, million)
– R&D Costs (CNY, million)
– Earnings Before Interest and Tax (EBIT) (Based on iFind) (CNY, million)
– Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (Based on iFind) (CNY, million)
(3) Summary of Balance Sheet
– Liquid Asset (CNY, million)
– Fixed Asset (CNY, million)
– Long-term Equity Investment
– Total Assets (CNY, million)
– Liquid Liability (CNY, million)
– Non-current Liability (CNY, million)
– Total Liability (CNY, million)
– Capital Reserve (CNY, million)
– Surplus Reserve (CNY, million)
– Undistributed Profit (CNY, million)
– Shareholders’ Equity (CNY, million)
– Equity Attributable to Shareholders of Parent Company (CNY, million)
(4) Summary of Cash Flow Statement
– Cash Received from Sales of Goods and Services (CNY, million)
– Cash Flow from Operations (CNY, million)
– Cash Paid to Purchase Fixed Assets, Intangible Assets and Other Long-term Assets (CNY, million)
– Cash Paid for Investments (CNY, million)
– Cash Flow from Investments (CNY, million)
– Cash Received from Investors (CNY, million)
– Cash Received from Borrowings (CNY, million)
– Cash Flow from Financing (CNY, million)
– Net Increase of Cash and Cash Equivalents (CNY, million)
– Cash and Cash Equivalents, End of Period (CNY, million)
– Depreciation and Amortization (CNY, million)
Companies in the report:
1 Shanghai Zhongyida Co., Ltd. (600610.SH)
2 Flowers King Horticulture Co., Ltd. (603007.SH)
3 Beijing Qianjing Landscape Co., Ltd. (603778.SH)
4 Shenzhen Ecobeauty Co., Ltd. (000010.SZ)
5 Yunnan Yuntou Ecology and Environment Technology Co., Ltd. (002200.SZ)
6 Beijing Orient Landscape & Environment Co., Ltd. (002310.SZ)
7 Palm Eco-Town Development Co., Ltd. (002431.SZ)
8 Pubang Landscape Architecture Co., Ltd. (002663.SZ)
9 LingNan Landscape Co., Ltd. (002717.SZ)
10 Shenzhen Wenke Landscape Co., Ltd. (002775.SZ)
11 Shenzhen Techand Ecology & Environment Co., Ltd. (300197.SZ)
12 Shandong Meichen Science & Technology Co., Ltd. (300237.SZ)
13 Inner Mongolia M-Grass Ecology And Environment (Group) Co., Ltd. (300355.SZ)
14 Misho Ecology & Landscape Co., Ltd. (300495.SZ)
15 Wuhan Nusun Landscape Co., Ltd. (300536.SZ)