Performance increased slightly, waiting for the company's performance to be released in the second half of the year
The company 23H1 achieved revenue of 31.2 billion yuan, +0.79% year-on-year, net profit of 1.120 billion yuan, +1.18% year-on-year, deducting non-net profit of 1,007 billion yuan, +3.7% year-on-year. Among them, the net profit and loss generated by the consolidated Communications Construction Group for the period was 130 million yuan. There was a slight increase in performance in the first half of the year, a high increase in new orders, and a low superimposed 22Q3 base. We are optimistic about the release of the company's performance in the second half of the year.
New orders increased rapidly, and market expansion results outside the province and abroad were remarkable. 23H1's road and bridge construction/maintenance construction/commercial concrete/design consulting business revenue was 279.5/20.3/7.3/240 million yuan, respectively, compared to -0.25%/-0.23%/+0.24%/+0.02%, respectively. Among them, the gross margin of road and bridge construction was 11.74%, down 0.07 pct from 22H1. Looking at each region, East China/Southwest China/Overseas regions accounted for 80%/9.5%/4.7% of revenue, respectively, and the year-on-year revenue growth rate was +0.03%/+4.82%/-15.58%, respectively. Shandong Road and Bridge Q2 signed new orders of 32.806 billion yuan, an increase of 126% over the previous year; 23H1 had a cumulative winning bid amount of 51.83 billion yuan, continuing the high increase since the second half of '22. Of these, the province won 39.4 billion yuan in bids, accounting for 76%. In the first half of the year, Shandong Province completed an investment of 163 billion yuan in integrated transportation infrastructure construction, completing 52.6% of the annual plan, an increase of 12.34% over the same period last year. The infrastructure boom in the province is relatively good. At the same time, the company has stepped up market development efforts outside the province and abroad, developed countries such as the Philippines and Myanmar for the first time and entered maintenance markets such as Anhui. At the same time, it is deepening secondary development in key regions outside of the province. At the same time, it has won 21.6% of domestic and foreign bids, with remarkable development results.
Profitability has increased, and cash flow has been pressured for a short time
23H1's comprehensive gross margin was 12.2%, +1.07 pct, and the period expense ratio was 5.33%, up 0.6 pct from the previous year. Among them, the sales/management/development/finance expense ratio changed 0.0pct/+0.17pct/+0.02pct/+0.41 pct, respectively. Among them, financial expenses increased 59% year-on-year, mainly due to the company's issuance of convertible bonds, which led to an increase in interest-bearing debt. Asset and credit impairment losses amounted to $275 million, an increase of $150 million over the same period last year. This was mainly due to loss of bad debts on accounts receivable and high impairment of contract assets. Under comprehensive influence, 23H1's net interest rate was 4.51%, +0.04 pct over the previous year. Cash flow was under pressure. The net amount of 23H1CFO was -1,334 million yuan, an increase of 629 million yuan over last year. This was mainly due to an increase of 1.38 billion yuan in security deposit payments. The current payout ratio was 70%/78%, respectively, a year-on-year change of +1.8 pct/-4.9 pct. The balance ratio was 79.5%, a slight increase of 2.09 pct over the previous year. Considering that convertible bonds will be converted to shares in the future, we expect that the balance ratio may decline.
Be optimistic about the company's maintenance business layout and maintain a “buy” rating
Considering that the company will continue to improve its maintenance business layout after the acquisition of Jiaotong Construction Group, superimposed orders have continued to increase rapidly since the second half of '22. We expect net profit from 23-25 to reach 28.85/3365/3,944 billion yuan, respectively. Approval grants the company 5 times PE in 23 years. The corresponding room for increase is 35%, and the target price is 9.24 yuan. The high growth value attributes are prominent, and the “buy” rating is maintained.
Risk warning: raw material prices rose more than expected; project repayment fell short of expectations; project implementation progress fell short of expectations.