We believe the stock price will rebound over the next 15 days.
The recent decline in stock prices is related to the collapse of the company's H-share circulation plan. According to recent reports, the company submitted an H-share circulation plan application to the China Securities Regulatory Commission on May 24 this year and was rejected. As a result, the market's progress in this plan fell short of expectations or overreacted, and the stock was mistakenly killed in a panic. From a fundamental point of view, the company's operations have nothing to do with the setback in the full circulation of H shares.
We estimate that the company's compound revenue growth rate from 19 to 22 will reach 45%. The current stock price is extremely attractive, corresponding to 3.8 times the 20-year price-earnings ratio. Maintain the “Strong Buy” rating and target price of 49 yuan. We believe that the market will absorb the news of the full circulation of H shares and is once again optimistic about Hebei Construction, so it is estimated that the probability that the stock price will rebound and rise within the next 15 days will reach 95%.
The company has continued to receive orders recently, and the fundamentals are in good condition. In the long run, the company owns the Beijing-Tianjin-Hebei region. As the largest private construction group in the region, it is expected to receive a large number of orders in Xiong'an New Area, especially steel structure prefabricated buildings. The company recently announced that it has won bids for several projects, including housing resettlement and sewage treatment projects in the Dongrong area of Xiong'an New Area, which is in line with our expectations for order growth brought about by the acceleration of the Xiong'an project.
Outside of Beijing-Tianjin-Hebei Province, the company cooperated with the Inner Mongolia Autonomous Region government to establish a construction investment group, which may become another important long-term growth engine. Recently, the company won the bid for the flight area field project of the new airport in Hohhot, and is expected to enter a period of order explosion in Inner Mongolia. Therefore, we believe that the market has overreacted to the progress of full circulation of H shares as less than expected.