Event: the company announced on December 6 that it has decided to invest in the construction and operation of the Sanyo railway project. It will increase its capital by 1.6 billion yuan to Yuhao Railway Company and acquire 13.25% equity in the project company, making it the largest shareholder. At the same time, the company formed a consortium to bid for the new construction and renovation projects of some sections of Sanyang Railway, with a total tender amount of about 9 billion yuan.
In addition, the company also announced that the company and six subsidiary companies will form a consortium with Shenzhen Qianhai New Haijintong Investment Partnership to bid for the equity transfer project and stock TOT project of Tianjin Metro Line 2 and Line 3 Rail Transit Operation Co., Ltd., with a planned investment of 1.32 billion yuan.
Invest in the construction of Sanyo Railway to support sustained growth in long-term performance. The Sanyang Railway, with a total length of 1100 kilometers, is a trunk railway channel in the national railway network planning to fill the gap in the east-west horizontal freight corridor in the Central Plains, with an annual transport demand of 160 million tons. The company invests in the construction and operation of its project from Sanmenxia in Henan to Suzhou in Anhui Province, and the company will undertake the business of project equipment supply, intelligent platform construction, whole-line operation and maintenance, etc.
The project has a construction period of three years and an operation period of 30 years, of which the three-year construction period is expected to obtain traditional technology and equipment, intelligent equipment, operation and maintenance and other business contracts of not less than 4.2 billion yuan (600 million yuan in the first year, 1.65 billion yuan in the second year, 1.85 billion yuan in the third year); during the 30-year operation period, the company is expected to earn about 1.8 billion yuan in operation, maintenance and other income, as well as 150 million yuan in transportation income. The profit prospect of Sanyang railway freight transport is good, and the corresponding operation and maintenance orders continue to land, and the project will form a strong support for the company's long-term sustainable performance growth.
Actively layout the Tianjin subway project, the whole line operation and maintenance strategy landed. At present, the company actively follows up the stock TOT project and boutique BOT project to further cut into the intelligent operation and maintenance service of the whole rail transit line. According to the announcement of the company, the tender for Tianjin subway project is stock TOT, with a planned investment of 1.32 billion yuan. If the consortium wins the bid, the company is expected to acquire a 51% stake in Tianjin Metro Line 2 and Line 3 Rail Transit Operation Co., Ltd. (including 30-year management rights) and two existing mature lines to operate long-term maintenance business. The estimated value of the 30-year life cycle of government procurement lines 2 and 3 (the total amount of government subsidy) is 27.109 billion yuan and 31.859 billion yuan respectively, totaling 58.968 billion yuan.
As early as May this year, the company and its wholly-owned subsidiary Shentie Operation and China Construction Corporation and its related parties formed a consortium, which has won the bid for the PPP project of Tianjin Metro Line 7, which verifies the realization of the company's entire line operation strategy.
If this project wins the bid, it will form a pattern of multi-line operation and maintenance in the same city and network intensive operation and maintenance. Tianjin subway market is expected to continue to break through in the future, which will further support the future rail transit operation and maintenance business needs of the company.
Investment suggestion: we expect the company's net profit from 2019 to 2021 to be 4.43,5.82 and 734 million yuan respectively, and the EPS is 0.16,0.21,0.26 yuan respectively.
Risk Tip: the prosperity of the industry is not as good as expected, and the progress of rail transit construction is not as expected to remind: the largest shareholder of China High Speed Railway is CIC Hi-tech, and the actual control of CIC Hi-tech and Anxin Securities is CIC Group.