Event
According to the annual performance announcement for 2022, the company achieved a total income of 3.289 billion yuan (- 11.2%) in 2022, including 3.193 billion yuan (- 12.5%) from travel fees, 453 million yuan (- 69.1%) in net profit and HK $0.20 per share in 2022, equivalent to 64.6%.
Comment
Affected by the epidemic and road network diversion, the company's 22-year performance is lower than expected. The total income of the company in 2022 was 3.289 billion yuan, down 11.2% from the same period, of which the toll income was 3.193 billion yuan, down 12.5% from the same period; the company's total net profit was 453 million yuan, down 69.1% from the same period. Due to the continuation of the epidemic, the diversion of the road network and the policy of reducing 10% of truck tolls on toll roads in the fourth quarter, the company's main business income has been greatly affected. And due to the income of 961 million yuan generated by the spin-off of Hubei Hanxiao Expressway in 21 years, the 22-year net profit declined greatly compared with the same period last year.
The recovery of the industry is expected, and we will continue to pay attention to the progress of recovery in the past 23 years. With the implementation of various epidemic prevention and control optimization measures since December 22, the road toll income of each project of the company has shown a trend of recovery, and the recovery of the industry is expected. The Spring Festival travel data at the beginning of 2023 further reflect the resilience of the economy and the rebound in travel demand after the epidemic. According to data from the Ministry of Transport, highway traffic volume has returned to 2019 levels during the Spring Festival travel season in 2023. In addition, since the Spring Festival transportation in 23, the company's toll road traffic has shown a double-digit growth compared with the same period in 2022 and 2019.
The acquisition of Lanwei Expressway will further enhance the profitability of the company. Lanwei Expressway is located in the core development area of Central Plains urban agglomeration and is an important part of Lannan Expressway in Henan Province. The acquisition of Lanwei Highway is the relayout of the company's strategy of "based on the Great Bay area and ploughing the central part". It is expected that 23 years will effectively fill the impact of the previous split of Hubei Hanxiao Expressway, and with the rise of central China and the development of the central economic belt, it is expected to continue to help the company improve its profitability in the future.
Main profit forecasts and assumptions: considering that the company's 22-year performance is lower than expected and it will take time for 23 years to recover, we appropriately reduce our previous profit forecasts for 23 and 24 years, and increase our forecast for 25 years. The forecast for 2023-2025 net return is 9.42pm 9.96 / 1.015 billion yuan (originally 2022324RMB 973pm 1.056 million), EPS is 0.56pm 0.60pm 0.61 yuan respectively. It will be given 10 times PE for 23 years (originally 10xPE in 2022) and maintain a "neutral" rating based on the exchange rate of the Hong Kong dollar to the renminbi of 0.8844, corresponding to a target price of HK $6.33.
Risk tips: the macroeconomic growth rate is reduced, the impact of road network diversion, and changes in industry policies.