Incidents:
The company released its report for the third quarter of 2023. In the first to third quarters of 2023, the company achieved revenue of 3.688 billion yuan, an increase of 12.16% over the previous year, of which the third quarter achieved revenue of 1,347 billion yuan, an increase of 9.49% over the previous year; in the first to third quarter, the company achieved net profit of 1,356 billion yuan, an increase of 13.87% over the previous year, of which 471 million yuan was realized in the third quarter, an increase of 12.78% over the previous year.
Q3 The company's revenue increased 9.5% year over year
In Q3 of 2023, the company achieved revenue of 1,347 billion yuan, a year-on-year increase of 9.49% and a year-on-month increase of 13.76%, mainly due to the concentrated release of summer travel demand and the low base for the same period in 2022. Toll revenue from equity participation in road property increased steadily. Q3's investment income from joint ventures was 58 million yuan, an increase of 23.4% over the previous year. Currently, the company controls the Guangzhou-Zhuhai-East Expressway, and is currently undergoing renovation and expansion work on the Shanjiangzhong Expressway and Huiyan Expressway.
Q3 operating costs increased 4.7% year on year, and gross margin remained at a high level. In Q3 2023, the company's operating costs were 420 million yuan, up 4.74% year on year, gross margin was 68.84%, up 1.42 percentage points year on year, and gross margin remained at a high level. In the first three quarters of 2023, the company added 68.79 million yuan in credit impairment losses, mainly due to additional impairment losses calculated for maintenance expenses of the Guangzhou-Foshan Expressway.
The company maintains a high dividend policy, and the dividend rate has a clear advantage
According to the company's “Shareholder Return Plan for the Next Three Years (2021-2023)”, the company's dividend rate will remain at least 70% in 2023. Assuming that the company's dividend rate in 2023 is 70%, based on the closing price of 8.35 yuan on October 27, it is estimated that the company's dividend rate in 2023 is about 6.43%, which has a significant dividend rate advantage.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2023-2025 to be 48.89/51.86/5.403 billion yuan, with a year-on-year growth rate of 17.27%/6.10%/4.17%, respectively; net profit of 16.05/17.39/1,854 billion yuan, a year-on-year growth rate of 25.67%/8.36%/6.60%, respectively; a 3-year CAGR of 13.23% and EPS of 0.77/0.83/0.89 yuan, respectively. In view of the company's significant location advantages in road production and maintaining a high dividend policy, based on comparable company valuations, we gave the company 11 times PE in 2024, with a target price of 9.13 yuan. Maintaining an “Overweight” rating.
Risk warning: Traffic growth falls short of expectations; investment in renovation and expansion exceeds expectations; charging policy changes.