Core views
1) The company achieved net profit of 0.02-102 million yuan in Q4 of 2023, with a central value of 52 million yuan; loss of 126 million yuan in Q4 in 2019; net profit after deduction of 0.19-81 million yuan, central value of 31 million yuan, and loss of 95 million yuan in Q4 in 2019.
2) The number of passengers on the company's Q4 intercity trains, direct trains and long-distance trains decreased by 9.7%, 4.5%, and 33.5% in Q3, respectively, and recovered to 67.5%, 103.3% and 93.9% in 2019.
3) During the 2024 Spring Festival travel season, the Guangzhou Railway Group is expected to send an average of 1,813 million passengers per day, exceeding nearly 20% of the same period in 2019.
4) On January 10, the Guangzhou Railway Group launched the first quarter train operation map. Guangzhou Baiyun Station began handling the Guangzhou-Shenzhen intercity train business. Guangzhou Railway Station may be renovated and expanded, and the company's asset value is expected to be re-valued.
occurrences
On the evening of January 25, 2024, the company announced a preliminary increase in its annual results for 2023. The company expects to achieve net profit of about 1.02 billion yuan to 112 million yuan, and realized net profit to mother of about 980 million yuan to 1,080 million yuan after deducting non-recurring profit and loss.
Brief review
Q4 achieved net profit of 0.02-102 million yuan, 2019 Q4 loss of 126 million yuan. The company is expected to achieve net profit of 0.02 to 102 million yuan in Q4 of 2023, with a central value of 0.52 billion yuan, and a loss of 126 million yuan in Q4 in 2019; estimated net profit without deducted net income of 0.19 to 81 million yuan, with a central value of 31 million yuan, and a loss of 95 million yuan in Q4 in 2019.
The company expects to achieve net profit of about 1.02 billion yuan to 1.12 billion yuan in 2024, which is close to our previous forecast of 1,157 billion yuan, and the performance is in line with our expectations.
Q4 passenger traffic continued to recover from 2019. Freight volume increased by 1.59% year-on-year. The company's total passenger traffic in Q4 in 2023 was 14.17 million people, down 24.38% from Q3 and recovered to 80.32% in 2019. Among them, passenger traffic on intercity trains, direct trains and long-distance trains decreased 9.72%, up 4.49%, and 33.51% from Q3, respectively, and recovered to 67.45%, 103.25% and 93.85% in 2019. In 2023, Q4's freight volume was 20.4631 million tons, up 4.79% month-on-month and 1.59% year-on-year.
During the 2024 Spring Festival travel season, the Guangzhou Railway Group expects the number of passengers to exceed 20% of the same period in 2019. During the 2024 Spring Festival travel season (January 26 to March 5), the Guangzhou Railway Group is expected to send 72.5 million passengers, an increase of 33.2% over the previous year, with an average of 1.813 million passengers per day, exceeding nearly 20% of the same period in 2019. The peak of pre-holiday traffic is expected to be 2.42 million visitors on February 3, and the peak number of visitors sent after the holiday season is expected to be on February 17 and February 25, respectively, with 2.3 million visitors and 2.25 million visitors respectively.
Guangzhou Baiyun Station has begun to handle the Guangzhou-Shenzhen intercity train business. Guangzhou Railway Station may be renovated and expanded. The company's asset value is expected to be re-evaluated. Starting January 10, 2024, the Guangzhou Railway Group will launch the first quarter train operation map. The new train operation map will add 119 passenger trains, including 117 EMU trains. Among them, the functions of Guangzhou South Railway Station, Guangzhou Baiyun Station, and Guangzhou East Railway Station will be redivided. Guangzhou Baiyun Station will handle 104 bus services, mainly northbound Beijing-Guangzhou high-speed rail trains, south-bound Guangzhou-Shenzhen intercity trains, and general speed passenger trains. Guangzhou Railway Station is being renovated and expanded or is about to open, and the company's asset value is expected to be revalued.
Investment advice
The company's revenue for 2023-2025 is estimated to be 25.672 billion yuan, 27.200 billion yuan and 27.982 billion yuan, with net profit attributable to mother of 1,076 billion yuan, 1,371 billion yuan and 1,535 billion yuan, corresponding EPS of 0.15 yuan, 0.19 and 0.22 yuan, respectively; corresponding A share PE of 19.56, 15.34 and 13.70 times, and the corresponding A share PB of 0.82, 0.80 and 0.78 times; the corresponding Hong Kong stock PE is 10.75, 8.43 and 7.53 times, corresponding to the PB of Hong Kong stocks is 0.45, 0.44, and 0.43 times. Referring to international peers and the company's historical valuation level, select 1.5 times the PB of A shares, calculated using the company's net assets of 3.64 yuan per share in 2023, corresponding to the target price of A shares of 5.47 yuan; select 1.0 times the PB of Hong Kong stocks, corresponding to the target price of HK$4.04 for Hong Kong stocks.
Risk warning
1) The risk of capacity investment falling short of expectations; 2) the risk of ticket price fluctuations; 3) the production capacity of newly built railways falling short of expectations; 4) the risk of competition from other modes of transportation; 5) Risk of adjustment of liquidation policies.