Events:

The company released its mid-2022 report, with revenue of 4.729 billion yuan in the first half of 2022, an increase of 5.27 percent over the same period last year, and a net profit of 231 million yuan, an increase of 7.70 percent over the same period last year, deducting 167 million yuan of non-return net profit, a decrease of 5.23 percent over the same period last year.

Comments:

The performance is in line with expectations, affected by the epidemic control Q2 performance decline. The company's Q1 newly signed order was 5.397 billion yuan, an increase of 48.87% over the same period last year, an income of 3.866 billion yuan, an increase of 35.07% over the same period last year, and a net profit of 157 million yuan, an increase of 30.24% over the same period last year. The epidemic broke out in Shanghai in early March, and the global static management was officially implemented on March 30, and was unsealed on June 1. The epidemic in Shanghai led to the company's business expansion and limited construction progress, resulting in a decline in Q2 performance.

As one of the main forces of steady growth in Shanghai, the company is expected to usher in significant repair in the second half of the year. The company is the only listed company in the state-owned assets field in Pudong that focuses on engineering construction. It has undertaken key projects such as the North Corridor of Pudong Airport, is at the forefront of the infrastructure market in Pudong New area, and maintains good cooperation and interaction with many departments. We expect that with the full resumption of work and production in Shanghai and the promotion of a series of key investment projects, the company, as one of the main forces of stable growth, is expected to undertake a large number of engineering construction tasks, and its annual performance will still achieve rapid growth.

The source of funds is sufficient to ensure the release of future development needs and performance. In April 2022, the general meeting of shareholders of the company examined and passed a motion on the company's proposed issuance of bond products of no more than 7 billion yuan. In May, the special asset support plan for the construction of Deloitte Park in Pudong, with the company as the original owner, received a letter from the Shanghai Stock Exchange. the total amount of the special plan issued did not exceed 717 million yuan; in June, the company's application for registration of corporate bonds not exceeding 2 billion yuan was approved. In July, the company's application for green debt registration of no more than 1 billion yuan was approved. Sufficient sources of funds ensure the company's future business investment needs and performance realization.

Maintain a "buy" rating. According to the profit forecast adjusted according to the actual performance of the company, it is estimated that the EPS of the company from 2022 to 2024 will be 0.64 EPS 0.78max 0.92 yuan, and the corresponding PE is 7.27 times that of 10.42max 8.61max.

Risk tips: the impact of the epidemic, infrastructure investment is not as expected, performance forecast and valuation judgment is not as expected