This paper makes a detailed analysis of the three major business and financial situation of Zhengping shares, as well as the prospect of the industry and the position of the company in the industry. Combined with the situation of the industry and the company, it is expected that the reasonable valuation of Zhengping shares in 16 years is between 30-40 times, and the reasonable share price range after listing is 8.1-10.8 yuan.
The company is the leading enterprise of road and bridge construction in Qinghai province. The company's main business includes road and bridge engineering exploration and design, construction, test testing, maintenance integration business and engineering equipment production and sales business, of which road and bridge engineering construction (including maintenance) has the greatest contribution to business income, accounting for 94.3% in 2015; from a regional point of view, revenue in Qinghai Province accounted for 87% in 2015, while non-Qinghai business accounted for 13%. The actual controls of the company are Jin Shengguang, Jin Shenghui and Li Jianli, who directly or indirectly hold 62.46% of the equity.
During the 13th five-year Plan period, there is a large investment in highway construction, and the western region is an important area of investment. According to the three-year Action Plan for the Construction of Major Transportation Infrastructure projects, from 2016 to 2018, we will focus on promoting the preliminary work of 54 projects, building, rebuilding and expanding more than 6000 kilometers of expressways, involving an investment of about 580 billion yuan. During the 13th five-year Plan period, China plans to build 46000 kilometers of expressways, and the central and western regions plan to build 23000 kilometers, accounting for 50%. According to the highway construction investment during the 12th five-year Plan period, 49400 kilometers of expressways will be built during the period from 2011 to 2015. the investment involved is 3.78 trillion yuan, and the average cost is about 76.48 million yuan per kilometer. we estimate that the investment in highway construction will be at least 3.5 trillion yuan during the 13th five-year Plan period. At least 1.76 trillion yuan will be invested in its central and western regions.
The company has rich construction experience, high brand image and strong competitiveness. As a leading road and bridge construction enterprise in Qinghai Province, the company has been ploughing deeply in the field for more than 20 years, and has rich experience in road and bridge construction, especially in the plateau area. With its good market reputation and excellent engineering quality, the company has established a widely recognized brand image in the industry and won the leading qualification level in the region. In addition, the company has a strong team of professionals, outstanding technology, and has an efficient management model. In the future, the company will fully benefit from the development of the industry, undertake more projects in the highway construction in the western region and even the whole country, and enhance the scale of the company.
Future growth points: 1) during the 13th five-year Plan period, the investment in highway construction is large, the western region accounts for 50%, and the space is vast, with at least 1.76 trillion investment in the western region and at least 230 billion yuan in Qinghai; 2) stabilize the market share in the province and expand the market outside the province. Because of the strong support of national policies for highway construction in the western key areas, the company has benefited a lot as a leading enterprise in Qinghai Province. 3) expand PPP projects, increase the size of the company and improve the profitability of the company.
Combined with the situation of the industry and the company, it is estimated that the EPS of the company in 16 and 17 years is 0.27,0.33 yuan, while the average PE of Shandong Road and Bridge, Sichuan Road and Bridge, Beixin Road and Bridge in 16 years is 57.80 times, we think that the reasonable valuation of the company in 16 years is between 30 and 40 times, and the reasonable share price range after listing is 8.1-10.8 yuan.
Risk tips: macroeconomic decline exceeding expectations; policy risk; payback risk.