Summary of the report:
The supervision industry is an intelligence-intensive industry with high gross profit, which currently presents a decentralized differentiation pattern of "4S", there is a large space for integration, and the degree of market attention is far lower than that of design / construction / other construction supporting areas.
The company is the leader of private supervision enterprises, and it is the first and only pure supervision target of A shares. Scarcity will help the company expand and rise and empower the supervision industry. At present, the ownership structure is healthy, the real controller has rich experience in project management, and the long-term equity incentive mechanism fully releases the performance vitality. Deep ploughing South China, enjoy the dividend of the Great Bay area. The sales network is well developed, and the partnership system and the culture of Da'an College are homogenized and expanded. The company operates steadily, the growth rate of performance is guaranteed, the business structure is significantly optimized, and cross-regional development has achieved results. Cash flow is expected to continue to improve, with plenty of cash and a low debt ratio.
The company actively extends the industrial chain vertically and integrates seven major industries horizontally. since its listing, the company has accelerated its expansion and successively participated in the mergers and acquisitions of Hongmin Electric Power, Guangdong Shunshui, Guangdong Daoxin and Weiss Electric Power, and strongly cut into the electric power / water conservancy / vehicle-road coordination market. In addition, it has successively established strategic cooperation with Xinjiang Jianzi, Yanshan Yulong, Chenyue Construction Management and Jinjiang Group to promote cross-regional and diversified development, and plans to set up M & A funds to help integrate strategies.
The company uses 5G application to empower traditional business to create intelligent construction site / urban industrial ecology, which is more significant than the business directly brought about by 5G network construction, and is the right way to open the 5G era. The company relies on the profound background of engineering supervision to create the most authentic intelligent construction site products, put into use throughout the country 20 + provinces and cities, 500 + projects, but also large operators and major developers endorse, and participate in Guangdong Dao Xin plus car road collaborative market to drive the main business of engineering consulting, the latter is the first car road collaborative one-stop solution integrator in Dawan District.
Company profit forecast and investment rating: the company is expected to achieve operating income of 598 million yuan, 755 million yuan and 944 million yuan from 2019 to 2021, with earnings per share of 0.48,0.61 and 0.78 yuan respectively.
It is optimistic that the company will fully benefit from industry consolidation, 5G and Greater Bay area construction in the future as a scarce core asset during the expansion period. Combined with absolute and relative valuation methods, the target price of the company is 21.98 yuan per share, corresponding to the PE of 46.2X, 36.1X and 28.1X from 2019 to 2021. Upgraded to "highly recommended" rating.
Risk hints: policy risk, project and acquisition below expectations, competitive risk, financial risk.