This report is read as follows:
The company's 2018 performance forecast is basically in line with only slightly lower expectations; considering that Henan capital construction space is high and financial is strong, and the company's competitive advantage in the province will benefit from the upsurge of high-speed / municipal construction, it will continue the high growth trend and maintain the increase of holdings.
Main points of investment:
Maintain and increase holdings. The company's home net profit forecast for 2018 is only slightly lower than expected. We speculate that land policy / credit crunch and other drag on growth, downgrade the forecast for 2018 EPS to 2.23 yuan (formerly 2.35 yuan) growth rate 33%, maintain the 2019 EPS of 3.21x10 yuan 4.09 yuan growth rate 44x27%, maintain the target price of 49.6 yuan, 201920 PE 1512 times PE, increase holdings.
2018H2 performance growth has slowed. 1) single-quarter results of 2018: 0.45Accord0.7GUBG 0.71mm 1.47 billion, the growth rate is 32pm 7732max. The growth rate has slowed down. 2) in 2018, due to the macro credit crunch, the decline in infrastructure investment and land policy constraints and other factors led to a significant slowdown in the implementation of infrastructure projects and order carryover. The company is the first to feel the pressure at the front of the industrial chain, so the growth rate slows down.
Henan capital construction space is high, finance is strong, debt is low. 1) the comprehensive density of Henan highway 0.041km (ten thousand people) domestic 23rd, the 13th five-year Plan requires traffic mileage 7800km is only about 6600km and planning or continue to be built; 2) the density of Henan road and bridge is lower than that of first-tier cities and the quality of Henan road and bridge is lower than that of first-tier cities / Central Plains urban agglomeration / Zhengzhou national central city and other catalytic municipal construction; 3) Henan total GDP growth rate of 57.6% / financial revenue growth rate of 10.5% / local debt ratio of GDP12.5% 29 4) Henan won 118.4 billion of the central 2019 transfer payment and 97.3 billion balanced payment. 5) the three major platforms of highway construction and operation in Henan are operating well.
It is optimistic that the company's high performance growth in 2019 is better than 2018. 1) excellent fundamentals: strong profitability (gross / net interest rate 48x28%) / low debt ratio 35% / capital on hand 74% higher than revenue pledge; 2) qualification / technology / cohesion / per capita net four logical support companies to benefit from the highway / municipal construction boom in the province, we estimate that the highway design income in 2018-20 will be about 8.4 billion RMB 1.07 billion + municipal 2.25 billion RMB 3.1 billion. 3) the acquisition of the Provincial Coal Institute to enhance the strength of underground rail transportation and all the target 2019 and thickening performance (2019-20 commitment to deduct the non-net profit ≥ 0.32 billion); 4) the company strengthens the localized layout (setting up 6 regional operation centers outside the province), and the non-provincial business will be increased to more than 20% in the future; 5) the company will set up a branch in Xiongan or promote the construction of Xiongan.
Core risks: infrastructure growth is lower than expected, non-provincial and overseas market expansion is not as expected, etc.