The landscaping industry is expecting losses, so what are the future development prospects?
As of today, more than half of 2024 has passed, and major listed landscaping companies have successively released their half-year performance forecasts. Major companies are forecasting losses, and as the leading enterprise among landscaping companies, Orient Landscape's total projected loss reaches -1.2 billion yuan to -1 billion yuan, ranking first.
According to Orient Landscape's 2024 half-year performance forecast, the company expects the net profit attributable to shareholders of the listed company to show a loss of 1.2 billion yuan to 1 billion yuan, a change of -16.84% to -2.63% compared with the same period last year, with basic earnings per share showing a loss of 0.45 yuan per share to 0.37 yuan per share.
There are several main reasons for the performance change
1. Ecological construction business: Although the company achieved a major breakthrough in project expansion, with a notable increase in the volume of newly won bids and newly signed orders, the conversion of output value from newly won orders is cyclical, and the conversion rate in the current period is relatively low. At the same time, in the first half of 2024, in order to accelerate payment collection and promote projects to meet payment collection conditions as soon as possible, the company focused on advancing the settlement of existing projects, and the deductions from project settlement significantly reduced current revenue.
2. Industrial waste recycling and regeneration business: Out of consideration for risks such as funding, the business scale was somewhat controlled, and revenue declined to a certain extent.
3. Provision for impairment of receivables: The provision for impairment of receivables based on aging eroded profits considerably.
4. Expense ratio: The company's various expenses as a proportion of revenue remained relatively high, resulting in a net profit loss.
Main businesses of profitable enterprises
Orient Landscape's profitable enterprises mainly include Orient Landscape Nantong Jiuzhou Environmental Protection Technology Co., Ltd., Orient Landscape Shaoxing Lvjia Environmental Protection Technology Co., Ltd., the domestic first low-level radioactive waste plasma volume reduction demonstration project constructed by Orient Ruilong under Orient Landscape, and Shenzhen Jiechi Technology Co., Ltd. under Orient Landscape. The main businesses of these enterprises include hazardous waste incineration and disposal, comprehensive utilization of waste acid, low-level radioactive waste treatment, and printed circuit boards.
In summary, Orient Landscape's performance in the first half of 2024 is projected to be a loss, mainly because the conversion of output value from newly won orders in the ecological construction business has a relatively long cycle and a relatively low conversion rate in the current period, and at the same time, in order to accelerate payment collection, it focused on advancing the settlement of existing projects, which significantly reduced current revenue; the scale of the industrial waste recycling and regeneration business was somewhat controlled, and revenue declined; the provision for impairment of receivables and the expense ratio eroded profits. The company will continue to advance strategic upgrading, optimize its asset-liability structure, accelerate payment collection, properly resolve legacy issues, and enhance the company's ability to continue as a going concern.
As of July 12, 2024, the profit and loss data of listed landscaping companies that have published their 2024 half-year performance forecasts are as follows:
1. Palm Eco-Town: It is expected that the net profit attributable to the parent company in the first half of 2024 will show a loss of 300 million yuan to 370 million yuan, and the net profit after deducting non-recurring gains and losses will show a loss of 400 million yuan to 470 million yuan. The main reasons are that during the reporting period, affected by the external environment, the advancement of construction and other work in the construction industry slowed down, the company's operating revenue declined compared with the same period last year, and the gross profit of the main business decreased; at the same time, due to the impact of existing investments, the company's financing scale remained at a relatively high level, and financial expenses were relatively large; based on the principle of prudence, the company made a relatively large provision for impairment of receivables. In summary, the company's main business gross profit could not cover period expenses and impairment provisions, resulting in a loss in the reporting period.
2. Lingnan Shares: It is expected that the net profit attributable to the parent company in the first half of 2024 will show a loss of 200 million yuan to 250 million yuan, and the net profit after deducting non-recurring gains and losses will show a loss of 240 million yuan to 290 million yuan. The main reasons are that in the first half of 2024, due to the impact of cyclical factors and changes in market supply and demand on the industry, government investment shrank, and the company is advancing the optimization of its business order structure and strategic layout, resulting in new orders falling short of expectations and an overall decline in construction revenue; secondly, the company's main customers are local governments or various investment and financing platforms under them, and due to the fiscal difficulties of some local governments, some projects failed to pay the company's engineering payments in a timely and full amount, the payment collection cycle lengthened and payment collection lagged, constraining the construction progress of the company's projects under construction and comprehensively affecting the company's performance; in addition, the progress settlement and completion settlement time of the company's existing projects were extended, and the amount reaching the payable ratio also declined to some extent.
3. Yueyang Forest & Paper: It is expected that the net profit attributable to the parent company in the first half of 2024 will show a loss of 40 million yuan to 50 million yuan, and the net profit after deducting non-recurring gains and losses will show a loss of 40 million yuan to 30 million yuan. The main reasons are that during the reporting period, overall market demand in the cultural paper industry was weak, and combined with the release of new production capacity by competitors in the industry, overall market competition became fierce, the company's paper product sales prices declined compared with the same period last year, and the decline was greater than the cost decline, causing the parent company's gross profit margin to be lower than the same period last year. In addition, the government subsidies received by the company in the current period decreased compared with the same period last year.
4. Mengcao Ecology: In the first quarter of 2024, the net profit attributable to the parent company was -29.3106 million yuan, a year-on-year decrease of 164.36%. The main reasons are that during the reporting period, the company's total operating revenue was 163 million yuan, a year-on-year decrease of 44.24%. Among this, the gross profit margin was 17.88%, a year-on-year decrease of 61.26%, the net profit margin was -18.63%, a year-on-year decrease of 222.84%, and selling expenses, administrative expenses, and financial expenses totaled 35.3692 million yuan, with the three expenses accounting for 21.68% of revenue, a year-on-year increase of 51.96%.
5. Pubang Landscape Architecture: In the first quarter of 2024, the net profit attributable to the parent company was 3.11 million yuan, a year-on-year decrease of 49.11%. The main reasons are that the company was affected by the macroeconomic environment, new orders decreased, and the number and scale of projects under construction declined to some extent.
6. Dongzhu Ecology: In the first quarter of 2024, the net profit attributable to the parent company was 3.1117 million yuan, a year-on-year decrease of 49.11%. The main reasons are that the company was affected by the macroeconomic environment, new orders decreased, and the number and scale of projects under construction declined to some extent.
7. Energy Conservation & Techand: In the first quarter of 2024, the net profit attributable to the parent company was -202 million yuan, turning from profit to loss year on year. The main reasons are that the company's operating revenue declined, and at the same time changes in the aging of the company's accounts receivable led to an increase in provisions for credit impairment losses.
8. Guanzhong Ecology: In the first quarter of 2024, the net profit attributable to the parent company was -6.7373 million yuan, a year-on-year decrease of 154.78%. The main reasons are that the company's construction output value decreased compared with the same period last year, and the company accrued financial interest expenses of 4.999 million yuan on bonds payable during the period.
From the first-half annual performance forecasts, it can be seen that major landscaping companies are all forecasting losses, so what is the future outlook for the landscaping industry?The future development prospects of the landscaping industry are relatively broad, and the following are some specific analyses:
1. Policy support: Ecological civilization construction and green development have risen to important national strategic decisions. The government has introduced a series of policies, such as strengthening urban greening and advancing new urbanization, which provide a favorable policy environment for the development of the landscaping industry. For example, the outline of the 14th Five-Year Plan proposes establishing and improving the mechanism for coordinated integrated development of urban agglomerations, coordinating the layout of infrastructure, industrial division of labor and collaboration, sharing of public services, joint ecological construction and joint environmental governance, and building livable, innovative, smart, green, humanistic, and resilient cities.
2. Continued advancement of urbanization: Although China's urbanization rate has already increased significantly in the past, there is still room for development compared with developed countries. As the urban population increases and the urban built-up area expands, demand for urban public spaces such as parks, squares, and street greening will also grow accordingly, thereby driving demand for landscape construction.
3. Rising public demand for a better living environment: Improving the ecological environment and enhancing the quality of human settlements have become important directions for urban construction. In the face of "urban diseases" such as air pollution, noise, and the heat island effect, people yearn for nature and are paying increasing attention to urban landscaping. This will prompt cities to increase investment in landscaping in order to improve urban ecology and beautify the environment, providing residents with better living spaces.
4. Development of the tourism and leisure vacation industry: The rapid rise of the tourism and leisure vacation industry will greatly stimulate the construction of scenic landscapes and the landscaping construction of tourist cities. People's growing demand for tourism and leisure will drive the development of various scenic areas, leisure resorts, and other projects, and these projects usually require high-quality landscape architecture to enhance their appeal.
5. Emergence of new market demand: Some emerging fields provide new growth points for the landscaping industry, such as the demand for rural landscape construction brought by rural revitalization; the field of mine restoration requires ecological restoration and landscape reshaping; urban-rural integration construction involves the overall improvement of urban and rural environments; new models such as EPC+O (integrated design-procurement-construction-operation) also provide more development opportunities for landscaping companies.
6. Momentum from technological progress: With the advancement of science and technology and the continuous improvement of greening technology, the technical level of the landscaping engineering industry has gradually increased. Modern landscaping engineering adopts a series of advanced technical means, such as automatic irrigation systems and green plant materials, making greening effects more beautiful and the ecological environment better.
However, the landscaping industry also faces some challenges, such as intensified market competition and increasingly diversified consumer demand. Landscaping companies need to continuously improve their own design, construction, and management levels, and focus on innovation and quality, in order to adapt to market changes.
Overall, the landscaping industry still has considerable development potential in the future, especially in improving the living environment, promoting sustainable urban development, and satisfying people's pursuit of a better life, where it will continue to play an important role. But at the same time, it is also necessary to pay close attention to market dynamics and actively respond to various challenges in order to achieve the healthy and stable development of the industry.