What happened: the company released its third quarterly report for 2021. The company realized operating income of 1.834 billion yuan, an increase of 37.54% over the same period last year, a net profit of 326 million yuan, an increase of 40.1% over the same period last year, and a deduction of 321 million yuan for non-net profit, an increase of 45.73% over the same period last year.

The performance grew as high as expected, and the asset-liability ratio declined. In the first three quarters of 2021, the company achieved operating income of 1.834 billion yuan, an increase of 37.54% over the same period last year, mainly due to business growth. The net profit returned to the mother was 326 million yuan, an increase of 40.1% over the same period last year, and the non-net profit was deducted from 321 million yuan, an increase of 45.73% over the same period last year. The net cash flow of the company's operating activities is-249 million yuan, which is 240 million yuan more than the same period last year. Among them, the cash paid to employees and employees was 208 million yuan more than that in the same period last year, mainly due to the increase in performance pay in the previous year. The asset-liability ratio was 56.51%, which decreased 4.05pct compared with the same period last year.

Profitability has improved, and the expense rate has declined during the period. 2021Q1-3, the company's gross profit margin is 37. 5%. 93%, an increase in 2.11pct over the same period last year. The net interest rate was 17.99%, an increase of 0.14pct over the same period last year. The expense rate during the period was 12.22%, which decreased 0.94pct compared with the same period last year. The contract assets were 1.421 billion yuan, an increase of 62.38% over the beginning of the year, mainly due to business growth. Accounts receivable was 255 million yuan, an increase of 83.87% over the beginning of the year, mainly due to business growth and a slowdown in payback. The monetary fund was 783 million yuan, a decrease of 43.05% compared with the beginning of the year, mainly due to the slowdown in payback and the payment of cash dividends. During the reporting period, the company accumulated provision for impairment of various assets totaling 69643650.91 yuan, accounting for 24.31% of the audited net profit of shareholders belonging to listed companies.

Relying on the state-owned assets of Guangzhou, the construction of the Great Bay area will benefit. The major shareholder of the company is Guangzhou Metro Group, which has obvious channel advantages. The company will take Guangzhou rail transit business as the center, based on Guangdong-Hong Kong-Macau Greater Bay Area, radiate the whole country. The National Development and Reform Commission issued the approval reply on Guangdong-Hong Kong-Macau Greater Bay Area Intercity Railway Construction Planning in August 2020, 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. In the future, by 2035, the mileage of the railway network in the Greater Bay area under construction will reach 5700 km, covering 100% cities at or above the county level. 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. Guangdong-Hong Kong-Macau Greater Bay Area rail transit has a broad space for development. As of June 30, 2021, the total amount of contracts signed by the company has exceeded 12 billion yuan, and the future performance is guaranteed.

Investment suggestion: it is estimated that the EPS of the company from 2021 to 2022 will be 0.88pm 1.07 yuan per share, and the corresponding dynamic price-to-earnings ratio will be 20.61max 17.09 times, maintaining the "recommendation".

Rating.

Risk hint: the risk that the growth rate of newly signed orders is not as fast as expected; the risk that Guangdong-Hong Kong-Macau Greater Bay Area construction is not as expected.