1. Jiangsu Traffic Holdings Holdings, the layout of the three major smart transportation businesses
The company is the country's leading provider of smart transportation platform-based solutions for highways, main highways, and urban transportation. Using the ETC electronic toll business as the cornerstone, the company has pioneered smart traffic operation management systems and smart transportation derivative businesses. In addition to the ETC promotion policy affecting the sharp increase in performance in 2019, the company's overall performance steadily increased the company's revenue by 597 million yuan in 2022, and the net profit of the mother was 151 million yuan. The smart transportation electronic charging business was the company's main source of revenue, and the smart transportation operation management system business became the second growth pole. Jiangsu Traffic Control is the controlling shareholder of the company, and the Jiangsu State-owned Assets Administration Commission is the actual controller of the company. It directly +indirectly controls 70.5% of the company's shares. In 2022, the company's revenue from Jiangsu Traffic Control accounted for 46.66%.
2. The recovery of high-speed travel is expected to drive revenue growth in the ETC business. The company's e-charging service has a monopoly position in Jiangsu and has a leading edge in the country. By the end of 2022, the number of the company's ETC users reached 22.15 million, covering 31 provinces across the country. 1.28 million new ETC users were added in 2022, accounting for 9.3% of the country's 13.7 million new ETC users. The revenue of electronic toll services is mainly the collection of service fees from vehicle owners by operation management units. The rates are relatively stable (mainly 0.35% for highways and 0.3%-0.6% for parking lots). We believe that with economic recovery in 2023, highway traffic is expected to resume growth, and the company's electronic toll business revenue is expected to re-enter the growth channel.
3. High-quality traffic data on cards, smart transportation operations are expected to usher in rapid development. Data elements are an important production factor in the new era. The value of data depends on data circulation. We believe that data exchange and the construction of a public data circulation system are the two important starting points for data elements. The company has been deeply involved in the transportation industry for many years, and has obtained a large amount of data through its own accumulation of ETC distribution and charges. At the same time, the company has vigorously developed cloud business in recent years and accumulated a large amount of traffic data through cloud platforms. The company is actively exploring the application of traffic data. The smart transportation derivative business relies on the advantages of the number of ETC users and data volume to build ecological scenarios using “ETC+” as the core. For example, the supply chain collaboration business already uses ETC data for external services. The company's smart transportation derivative business revenue in 2022 was about 14.14 million yuan. We believe that with the advancement of market-based construction of data elements, the smart transportation operation business is expected to usher in rapid development.
Profit forecast and investment advice: We expect the company's revenue for 2023-2025 to be 8.61/11.87/1,551 billion yuan, respectively, and net profit of 2.60/352/462 million yuan respectively. Since the company has been deeply involved in the transportation field for many years and has a core card advantage, referring to comparable companies that gave the company 50x PE in 2023, the target market value for 2023 is 13 billion yuan, the target price is 31.9 yuan, covering the “buy” rating for the first time.
Risk warning: the risk of data factor market policies falling short of expectations; the risk of repeated epidemics and macroeconomic changes; the risk of smart transportation derivative business development falling short of expectations; risk of policy changes and increased industry competition; forecasting assumptions are somewhat subjective.