Events:
The company announced to participate in the establishment of Pudong Science and Technology Innovation Investment Fund. The Pudong Science and Technology Innovation Investment Fund is established in the form of a limited partnership with a total contribution of 5.501 billion yuan. Among them, Pudong Construction, as a LP, subscribed for 400 million yuan. The fund is still in the stage of preparation and establishment, and there is no impact on the company's performance in the short term.
With a net cash size of more than 5 billion, there is still room for improvement in the benefit of subsequent use.
The company pays close attention to the opportunity of "docking science and technology creation strategy in Pudong New area, constantly promoting scientific and technological innovation and entrepreneurship, and accelerating the high-quality development of Pudong", and better participates in the new round of development of Pudong New area. In addition to Pudong Construction, Pudong Investment Holdings subscribed 1 billion, Zhangjiang (Group), Pudong Science and Technology Group and Pudong Jinqiao (shares) each subscribed 800 million yuan, Jinqiao (Group) subscribed 500 million, Lujiazui, Waigaoqiao and Zhangjiang Hi-Tech each subscribed 400 million.
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. Recently, the company's participation in the Pudong Science and Technology Fund is another excellent case of its investment. The net cash size of the company is more than 5 billion, and the asset-liability ratio is only 49%. It is full of ammunition and has a long-term growth prospect.
ROE will have greater flexibility. It is recommended that the "buy" rating be maintained with the PB valuation as the anchor.
With the continuous promotion of the construction of Shanghai Free Trade New area and the integration of the Yangtze River Delta, 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. At present, its excess cash is not its means of production, and the equity multiplier is only 2x. In the future, with the increase of regional high-quality projects, both investment and main business are expected to achieve rapid growth, ROE will have greater flexibility. The company has guided a revenue growth rate of 60% in 19 years, indicating that it has entered a period of rapid development. The establishment of a Pudong Science and Technology Innovation Investment Fund is an excellent case of optimizing the benefits of excess funds. The valuation center of the company's historical PB is 1.7x, maintaining the target price of 9.6yuan, 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
