Brief comment on performance
On October 27, 2023, Shandong Expressway released the third quarter report of 2023. 202301-Q3 achieved an operating income of 15.41 billion yuan, an increase of 27% over the same period last year, and a net profit of 2.58 billion yuan, an increase of 13% over the same period last year. Of this total, 202303 achieved an operating income of 5.7 billion yuan, an increase of 40% over the same period last year, and a net profit of 820 million yuan, an increase of 11% over the same period last year.
Business analysis
The operation road production car flow resumes, the revenue increases compared with the same period last year. In 202301-03, the company's operating income increased by 27% compared with the same period last year, mainly due to the increase in service income and toll income during the construction of the PPP project. (1) Highway business: the traffic flow of the road production in the company's operation was restored, and the toll income in 202301-03 was 8.18 billion yuan, an increase of 9.1% over the same period last year. Among them, the reconstruction and expansion project of the Jitai section of the company's core road production of Beijing-Taiwan Expressway was opened to traffic ahead of schedule in October 2022, and the toll revenue of Beijing-Taiwan Expressway increased by 45.5% compared with the same period last year. (2) Railway business: the operating income of the subsidiary Shandong High Speed Rail Transit Group increased by 6.6% over the same period last year, and the net profit increased by 22.5% over the same period last year, mainly because the freight volume in 202301-03 increased by 19% over the same period last year, which is higher than the national freight growth rate 12pct.
Q3 gross profit margin decreased compared with the same period last year, and the expense rate improved year-on-year. 202303 the company's gross profit margin is 31.8%, a decrease in 9.4pct compared with the same period last year, or an increase in service revenue during the construction period of the PPP project derived from zero gross profit. In terms of expense rate, 202303 company's period expense rate was 12.6%, year-on-year-6.Opct, of which the sales expense rate was 0.1%, an increase of 0.1 pct over the same period last year; the management expense rate was 3.8%, a decrease of 1.3 pct over the same period last year; the R & D expense rate was 0.6%, a decrease of 0.3 pct over the same period last year; and the financial expense rate was 8.1%, a decrease of 4.5pct over the same period last year. In 202301-03, the company achieved an investment income of 970 million yuan, an increase of 8.8% over the same period last year. Although the expense rate decreased during the period, due to the decline in the company's gross profit margin, the 202303 company's return net profit rate was 14.3%, which reduced the progress of the 3.9pct reconstruction and expansion project over the same period last year, and improved the quality and efficiency of the road and bridge operation. The company's Beijing-Taiwan Expressway Qiji reconstruction and expansion project Q1-Q3 completed an investment of 450 million yuan, 17% over the planned task. The reconstruction and expansion project of Jihe Expressway has fully entered the stage of pavement construction, with an investment of 1.24 billion yuan in the third quarter to ensure high quality and high standards to complete the annual planned investment. Looking forward to Q4, the company will improve the quality and efficiency of road and bridge operations, promote the revitalization of idle assets, maximize drainage efficiency, and make every effort to achieve the toll target. For the Beijing-Taiwan Qiji reconstruction and expansion project, the company will focus on the Yellow River Bridge and other control projects, ensure quality and safety, and ensure the completion of the annual investment task of 1.74 billion yuan.
Earnings forecast, valuation and rating
Maintain the company's 2023-2025 net profit forecast of 3.49 billion yuan, 3.94 billion yuan, 4.55 billion yuan, maintain the "buy" rating.
Risk hint
The economic repair is less than the expected risk, the construction progress of the reconstruction and expansion project is less than the expected risk, the risk of the change of highway toll policy, the risk of substantial reduction of investment income, and the risk of lifting the ban on restricted shares.