Events:
The company released its third quarter report in 2023. From the first to the third quarter of 2023, the company achieved revenue of 4.344 billion yuan, an increase of 9.01% over the same period last year, and a net profit of 1.351 billion yuan, an increase of 15.13% over the same period last year.
Among them, the company achieved revenue of 2.02 billion yuan in the third quarter, an increase of 72.84% over the same period last year, and a net profit of 511 million yuan, an increase of 0.78% over the same period last year. The high revenue growth in the third quarter is mainly due to the increase in revenue from the construction services of the PPP project for the reconstruction and expansion of Xuan-Guang Expressway compared with the same period in 22 years.
Q3 realized a toll of 1.081 billion yuan, an increase of 6.32% over the same period last year.
In 2023, Q3, the company's road production volume continued to recover, achieving toll income of 1.081 billion yuan, an increase of 6.32% over the same period last year. Among them, the traffic volume of the core road production he-Ning highway increased by 30.41% over the same period last year, with an income of 387 million yuan, an increase of 22.18% over the same period last year. Due to the reconstruction and expansion of Xuanguang and Guangci Expressway and the expansion of parallel line G318, toll revenue decreased by 35.34% and 24.69% compared with the same period last year. The reconstruction and expansion project of Xuanguang Expressway is expected to be completed by the end of 2024, when the capacity is expected to be significantly improved.
After the opening of the Ningxuan-Hangzhou broken road, the loss continued to be reduced, and the eastbound connection line of the Yuewu highway benefited from the opening of the broken road. The traffic volume of Q3 increased by 177.44%, realized toll income of 87 million yuan, and accumulated income of 201 million yuan in the first three quarters of 2023. On October 28, Wuyue Expressway, the eastbound connection line of Yuewu Expressway, was opened to traffic, and the Anhui section of Shanghai-Wuzhou Expressway was opened. It is expected that the traffic flow will be significantly boosted after the decapitation of Yuewu Expressway is opened.
The company paid 3.666 billion yuan for 100% equity of Liuwu Expressway, and the dividend rate was raised to 75%. The company proposed to buy 100% equity of Liuwu Expressway at 3.666 billion yuan, including 550 million yuan in cash and 3.116 billion yuan in shares. After the increase, the company diluted 10.34% and 11.76% of EPS in 2022 and January-June 2023, respectively, by issuing 469 million shares to Anhui Traffic Control. After the acquisition of Liuwu Expressway, the company's dividend rate will increase to 75% from 2023 to 2025.
Earnings forecast, valuation and rating
We estimate that the company's operating income in 2023-2025 will be 6419 million RMB 6650 pound 5.489 billion yuan respectively (the original value is 55.62 billion RMB 57.39pm 4.604 billion yuan, mainly due to the adjustment of PPP project construction income forecast), and the year-on-year growth rate will be 23.28%, 3.6%, 17.45%, respectively. The net profit of homing was 1.959 billion yuan, respectively, and the year-on-year growth rate was 23.69%, 5.02%, 4.37%, respectively. EPS was 1.08, 1.13 and 1.18 yuan, respectively. With the opening of Ningxuan-Hangzhou Expressway and Yuewu Expressway, we are optimistic about the continuous boost to traffic flow after the completion of the road network. With reference to the comparable company valuation, we give the company 11X PE in 2024, corresponding to the target price of 12.43 yuan, and maintain a "buy" rating.
Risk hint: the growth rate of traffic flow is lower than expected; the change of charging policy.