Event: the company disclosed its semi-annual report for 2021, with revenue of 1.12 billion yuan, an increase of 20.94% over the same period last year, and a net profit of 239 million yuan, an increase of 40.61% over the same period last year.
High performance growth as scheduled. 2021H1 achieved an operating income of 1.12 billion yuan, an increase of 20.94 percent over the same period last year. Among them, the total income from survey and design, planning and consulting, and project contracting was 974 million yuan, 52 million yuan and 93 million yuan respectively, an increase of 19.62%, 39.3% and 26.6% respectively over the same period last year. The net profit returned to the mother was 239 million yuan, an increase of 40.61% over the same period last year, deducting 235 million yuan from non-net profit, an increase of 43.67% over the same period last year.
2021Q2 achieved 608 million yuan, an increase of 14.82% over the same period last year, a record high for a single quarter. 2021H1's gross profit margin and net profit margin were 41.17% and 21.59% respectively, increasing 4.11pct and 2.95pct respectively compared with the same period last year. The net cash flow generated by 2021H1's operating activities was-332 million yuan, mainly due to the impact of the epidemic and the slowdown in payback in the first half of the year.
Based on the Greater Bay area, there are plenty of orders on hand. According to the relevant planning of the Guangdong Provincial Department of Transportation, Guangdong is expected to add 12 new urban rail transit lines and an additional operating mileage of 470 km by 2022. In August 2020, the National Development and Reform Commission issued the approval reply on Guangdong-Hong Kong-Macau Greater Bay Area's Intercity Railway Construction Planning, with a clear goal of creating a "Great Bay area on the track": by 2025, the operation and mileage of the railway network in the Great Bay area will reach 4700 km, fully covering the central cities and node cities of the Dawan area and key metropolitan areas such as Guangzhou and Shenzhen. By 2035, the mileage of the railway network operating and under construction in the Greater Bay area will reach 5700 km, covering 100% cities at or above the county level. Among them, the short-term construction plan includes 13 inter-city railways and 5 hub projects, with a total mileage of about 775km and a total investment of about 474.1 billion yuan. The company is based in Dawan area, and its core business is the survey and design business of rail transit. 2021H1 achieves an income of 686 million yuan in Guangdong Province, accounting for 61.27% of the total revenue. As of June 30, 2021, the total amount of contracts that the company has signed has exceeded 12 billion yuan, and the orders on hand are sufficient.
Backed by Guangzhou Metro Group, fully benefit from the development of Dawan area. Guangzhou Metro Group, as the business unit responsible for the construction of urban rail transit in Guangzhou, as the controlling shareholder of the company, is the largest customer of the company. Under the background of the great development of Guangdong-Hong Kong-Macau Greater Bay Area rail transit, the company relies on Guangzhou Metro Group, which has obvious channel advantages and broad prospects for future development.
Investment suggestion: it is estimated that the EPS of the company from 2021 to 2022 will be 0.85 yuan 1.02 yuan per share, and the corresponding dynamic price-to-earnings ratio will be 24 times earnings. It will be covered for the first time and will be given a "recommended" rating.
Risk tips: the risk that investment in fixed assets is lower than expected; the risk that newly signed orders are less than expected; and the risk that market expansion is not as expected.