Key points of investment:
Incident: The company achieved revenue of 1,226 million yuan in 2022, an increase of 5.75%, net profit of 160 million yuan, an increase of 0.11%, after deducting net profit of 77 million yuan from non-return mother, a decrease of 41.32%.
Q4 Profits accelerated, and revenue from business outside the province grew faster. On a quarterly basis, Q1, Q2, Q3, and Q4 revenue increased 2.04%, -8.20%, 8.55, and 15.65%, respectively; Q1, Q2, Q3, and Q4 net profit increased -48.62, -29.02%, 4.56%, and 30.34%, respectively, and Q4 profit growth increased year-on-year. By business, revenue from planning consulting services, big data software and smart transportation, engineering design and testing, and other businesses was 508 million yuan, 360 million yuan, 356 million yuan, and 101 million yuan respectively, up -2.19%, 27.25%, -0.07%, and 498.10%, respectively. By region, business revenue within Guangdong Province and outside Guangdong Province was 943 million yuan and 281 million yuan respectively, up 0.07% and 29.83% respectively.
Gross margin has declined, net interest rate has declined, and net operating cash outflow has declined. In terms of gross margin, the company's gross margin fell 1.19 percentage points year on year to 36.37%. Among them, big data software and smart transportation and engineering design and inspection business fell 0.86 and 0.13 percentage points year on year, respectively. In terms of the period cost rate, the overall period expense ratio increased 1.87 percentage points year on year to 25.58%, of which the sales expense ratio was 2.98%, up 0.05 percentage points year on year; the management expense ratio (including R&D expenses) increased 2.38 percentage points year on year to 22.38%; and the financial expense ratio decreased 0.56 percentage points year on year to 0.22% year on year. The total impairment of assets+credit amounted to 44 million yuan, an increase of 21 million yuan over the previous year. In terms of net interest rate, the company's net interest rate dropped slightly by 0.33 percentage points to 13.50% in '22. ROE fell 14.24 percentage points year over year to 7.99%.
There was a net outflow of operating cash flow of $16 million, a decrease of $73 million from the same period last year; of this, payout fell 3.88 percentage points to 80.28% from the same period last year, and payouts decreased 15.28 percentage points to 29.22% from the same period last year.
The digital business has become a new growth point for performance, and the amount of new contracts signed has increased rapidly. The company's digital business became a new performance growth point in 2022, achieving revenue of 360 million yuan, an increase of 27.25% over the same period, and a contract amount of 835 million yuan, accounting for 48.45% of the total contract amount, an increase of 70.71% over the same period. The company applied the “digital twin platform” results in various benchmark projects such as the Shenzhen Railway Phase 5 Plan, Fujian High-speed Digital Twin, and the Shenzhen Transportation Integration Platform, which received widespread praise from owners and became a benchmark for digital applications in the industry. At the same time, the company launched the “Shenzhen Research Cloud” digital tool platform, which has become an important production tool supporting planning, design and other businesses. The company reached an equity cooperation agreement with Nanjing Urban and Transportation Planning and Design Research Institute Co., Ltd., and became the controlling shareholder of the Nanjing Urban Communications Institute. It has actively carried out strategic and business integration. After integration, Shenzhen-Chengdu Communications as a whole formed a “double think tank brand+ specialized agency (research+division+holding company) +national service” group organization.
Profit forecasts and ratings. The company is an important technical service unit for transportation decision-making departments in Shenzhen, with strong capabilities in big data software and smart transportation technology. We expect the company's EPS for 23-24 to be 0.96 yuan and 1.15 yuan respectively, giving it a price-earnings ratio of 40-42 times in '23, and a reasonable value range of 38.40-40.32 yuan, giving it an “superior market” rating.
Risk warning. Repayment risk, policy risk, risk of business development falling short of expectations.