Incident: The company released its 2021 annual report. In 2021, the company achieved revenue of 14.361 billion yuan, an increase of 14.13% over the previous year; Guimu's net profit was 328 million yuan, an increase of 24.45% over the previous year; after deduction, the net profit of Fumo was 324 million yuan, an increase of 19.73% over the previous year.
Revenue has been growing steadily, and profitability has improved. In 2021, the company achieved revenue of 14.361 billion yuan, an increase of 14.13% over the previous year. Among them, hydropower achieved revenue of 8.496 billion yuan, an increase of 29.85% over the previous year; municipal engineering achieved revenue of 2,393 million yuan, an increase of 0.69%; other projects achieved revenue of 644 million yuan, a decrease of 3.83%; product sales achieved revenue of 1,006 million yuan, a decrease of 28.22% over the previous year; hydroelectric power achieved revenue of 251 million yuan, a decrease of 10.77% over the previous year; wind power generation achieved revenue of 887 million yuan, an increase of 20.64% over the previous year; solar power achieved revenue of 553 million yuan, an increase of 20.64% over the previous year 19.17%; survey, design and consulting services achieved revenue of 74 million yuan, an increase of 8.99% over the previous year; other businesses achieved revenue of 59 million yuan, an increase of 85.25% over the previous year. In 2021, the company achieved net profit of 328 million yuan to the mother, an increase of 24.45% over the previous year. The gross margin and net interest rate were 11.25% and 2.55% respectively, up 0.09 pct and 0.36 pct respectively. Net operating cash flow was 847 million yuan, a decrease of 124 million yuan from last year.
Based in Guangdong, there is broad market space for water conservation+rail transit construction. The company is located in Guangdong. The actual controller is the Guangdong Provincial State-owned Assets Administration Commission. Revenue from Guangdong reached 11.426 billion yuan in 2021, accounting for 79.56% of total revenue. In 2021, the company signed 7.792 billion yuan of new orders, a decrease of 16.61% over the previous year. According to the “14th Five-Year Plan for Water Resources Development in Guangdong Province”, the investment scale of water resources construction in Guangdong Province in the “14th Five-Year Plan” is expected to be 405 billion yuan, an increase of 117.39% over the “13th Five-Year Plan”. According to the “14th Five-Year Plan for the Comprehensive Transportation System of Guangdong Province”, Guangdong Province allocated a total investment of about 2 trillion yuan for major transportation infrastructure construction projects in the “14th Five-Year Plan”, an increase of 39.86% over the total investment in transportation infrastructure completed in the province during the “13th Five-Year Plan”. The company's engineering construction mainly includes the construction of hydraulic and hydropower projects and the construction of rail transit projects. There is broad scope for future development.
The prospects for the clean energy power generation business are promising. Dual carbon drives the energy transition, and the share of clean energy generation will continue to increase in the future. The company is actively expanding clean energy power generation business in northwest regions such as Xinjiang and Gansu and southeast coastal regions such as Guangdong and Shandong. By the end of 2021, the company had put into operation a total of 1,42.38 MW of clean energy projects, including 263 MW of hydroelectric power, 673 MW of wind power, and 606.38 MW of photovoltaic power generation. At the same time, the company is the largest wind turbine tower manufacturer in Guangdong Province and a first-tier domestic wind power equipment manufacturer. Future development prospects are promising.
Investment advice: The company's revenue for 2022-2023 is estimated to be 182.39/22.434 billion yuan respectively, up 27%/23% year on year, net profit of 404/495 million yuan, up 24%/23% year on year, EPS per share is 0.34/0.41, corresponding to the current stock price PE 26.2/21.4 times, respectively, maintaining the “recommended” rating.
Risk warning: The risk of increased market competition; the risk of the COVID-19 pandemic affecting the progress of the project; the risk of changes in construction costs due to price changes in labor, material costs, construction machinery, etc.
