Events:
The company issued an 18-year annual report, achieving operating income of 3.67 billion yuan, an increase of 13%, and a net profit of 452 million, an increase of 22%, or 0.47 yuan per share. The company plans to pay a dividend of 1.5 yuan (including tax) for every 10 shares. The company's guiding operating income in 2019 was 6.04 billion yuan, an increase of about 65%, and the guided gross profit margin was about 11.5%, which was about 3.5pcts lower than that of 18 years.
By business, the revenue from road and bridge construction was 3.5 billion yuan, an increase of 16%, while the revenue from asphalt concrete was 120 million yuan, a decrease of 43%. The company's comprehensive gross profit margin is 15%, an increase of 2.4% over the same period last year; the gross profit margin of road and bridge construction is 14.2%, with an increase of 1.7 pcts; and the gross profit margin of asphalt concrete is 17.6%, with an increase of about 5pcts. The company's revenue in the fourth quarter was 1.7 billion yuan, an increase of 10%, and the gross profit margin in the fourth quarter was 21%.
The investment income in 18 years is 230 million yuan, of which the contribution of BT repurchase is only 36 million yuan, and the rest is mainly the return on structural deposits and the investment income of associated enterprises. Judge that the company's investment income will remain stable in the future.
Project management with abundant ammunition and scarcity + investment and financing enterprises:
The expansion of the construction industry depends on increased leverage. As of 18Q4, its asset-liability ratio is only 49%, which means that the company still has room to increase leverage in an environment where state-owned enterprises are reducing leverage. Its net cash scale is about 5.1 billion yuan, it is full of ammunition, and the subsequent scale expansion is worth looking forward to.
The company is an A-share scarce project management + investment and financing enterprise, characterized by the "three high" per capita output value, profit and salary. The company obtains excess returns by optimizing project management and shares long-term benefits by investing in selected infrastructure projects. With the arrival of the historical opportunity period of regional construction and the increase of high-quality projects, the company's business scale and profits will have greater flexibility.
The 19-year income guidance exceeded expectations and embraced the historical opportunity period of regional construction:
With the integration of the Yangtze River Delta and the continuous promotion of the construction of Shanghai Free Trade New area, the demand for regional construction will be gradually released. Pudong construction has a low asset-liability ratio and abundant cash on hand, which will usher in a period of historical opportunity. Considering that the company's revenue guidance is higher than expected, the company's EPS in 2019-20 will be raised to 0.55,0.63 yuan (the previous value is 0.53,0.60 yuan). The EPS forecast for 2021 will be increased by 0.75 yuan. At present, its excess cash is not its means of production, and ROE is expected to pick up with the increase of high-quality projects in the future. The valuation center of the company's historical PB is 1.7x, raising the target price to 9.6 yuan, corresponding to static PB1.6x. Maintain a "buy" rating.
Risk hint: gross profit margin is declining rapidly, regional investment is not as expected, and reinvestment risk
