Incidents:
On March 20, the company released its 2022 annual report. In 2022, the company achieved annual revenue of 4.169 billion yuan, a year-on-year decrease of 21.17%, and a net profit of 1,277 billion yuan, a year-on-year decrease of 24.9%, mainly due to the expiration of Guangzhou-Foshan Expressway tolls, the impact of the epidemic, and the impact of the truck toll reduction policy in the fourth quarter. Among them, Q4 2022 achieved revenue of 880 million yuan, a year-on-year decrease of 33.03%, and the net profit of returning to the mother was 85 million yuan, a year-on-year decrease of 72.22%. In 2022, the company's dividend capital was 895 million yuan, with a cash dividend of 4.28 yuan for every 10 shares, with a dividend rate of 70%.
Road toll revenue from the company's main road production has declined markedly, and financial costs have declined. With the exception of the Guangzhou-Foshan Expressway, which was affected by the expiration of tolls, revenue from the Beijing-Zhuhai-East Expressway was affected by the impact of the epidemic due to geographical location. In 2022, traffic on the Fokai Expressway, Beijing-Zhudong, and Guanghui Expressway fell 10.80%/20.83%/8.98% respectively, and toll revenue fell 10.88%/20.87%/13.87% respectively. The company's revenue from its participation in road production also declined markedly. The company's long-term equity investment income fell by about 14.5% in 2022.
According to the company's annual report, in 2022, the company effectively reduced financial expenses through early loan repayment, promotion of lower interest rates on stock loans, and active revitalization of stock capital. In 2022, the company's financial expenses were 191 million yuan, a year-on-year decrease of 13.82%.
Optimistic about the Greater Bay Area's traffic recovery capacity and the road production location advantages of the main road production companies after the renovation and expansion of traffic volume are remarkable. Traffic recovery in the Greater Bay Area is strong, and the company's performance is expected to usher in an upward inflection point. The Guangzhou-Zhudong Expressway is currently undergoing renovation and expansion work, and the Guanghui Expressway is also in the early stages of the renovation and expansion project. It is hoped that after the renovation and expansion, the main road production will be able to effectively extend the toll operation period, and traffic capacity and toll standards are also expected to increase simultaneously.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2023-2025 to be 50.09/53.58/5.576 billion yuan respectively, with a corresponding growth rate of 20.15%/6.98%/4.06% respectively; the net profit of the mother is 1,645/17.39/1,851 billion yuan respectively. The corresponding growth rate is 28.83%/5.68%/6.46%, respectively, and EPS is 0.79/0.83/0.89 yuan per share, respectively. In view of the company's remarkable location advantage in road production and maintaining a high dividend policy, based on comparable company valuations, we gave the company 11 times PE in 2023, with a target price of 8.70 yuan. Maintain the “increase in holdings” rating.
Risk warning: Traffic growth falls short of expectations; investment in renovation and expansion exceeds expectations; fee policy changes.