The central enterprise design platform was spun off and listed. CCCC Design was given a “buy” rating. CCCC Design is a design platform under the CCCC Group. Compared with other domestic design listed companies, the company's operation is steady, large-scale and high-end trends are obvious, and operating data such as profit margin, cost ratio, and cash flow are impressive. Although the total growth rate of the domestic design market is slowing down, the company is expected to use its leading advantage to expand the field and increase its market share, and the overseas priority strategy will provide incremental market development. In the future, it will implement its development strategy through both endogenous and epitaxial paths, and is expected to target the growth path of AECOM, a leading overseas design company. The company's net profit for 23-25 is estimated to be 1,722/18.46/1,982 billion yuan. Comparatively, the company's 24-year Wind unanimously expected PE to be 12x. Considering that the company is an industry leader, has a global layout, and has obvious advantages in scale and high-end, the company was given 14xPE in 24 years, with a target price of 12.53 yuan, covering the first time to give it a “buy” rating.
The operating quality of the national team in the field of infrastructure design is superior to that of peers, and the company has excellent shareholder background, brand qualifications, and talent reserves, etc., and will support the company's development for a long time: 1) CCCC Group is expected to empower the company in multiple dimensions such as strategy, customers, and technology; 2) the company as a whole has diverse project experience and complete qualifications; 3) The company values talent reserves, and is superior to its peers in terms of revenue generation and innovation ability per capita. The above advantages have helped the company achieve a national layout. The trend of scale and high-end development is obvious, and the financial indicators are outstanding. In the future, the growth rate of the domestic design market will slow down, and the company is expected to increase its market share with leading advantages; the average overseas revenue share of the six major design institutes in '22 was only 3.5%. Compared with China Communications Construction's 13.7% overseas revenue share, there is still plenty of room for improvement. In the future, with overseas priority strategies and group coordination support, the potential to go overseas can be expected.
The rock of the mountain: Implications of the development path of overseas design giant AECOM AECOM is a global engineering design giant with revenue exceeding 10 billion US dollars. The company's development process includes two major stages of mergers and acquisitions and transformation: 1) Before 2017, the company rapidly increased its business volume through a continuous merger and acquisition strategy; 2) Since 2018, the company has carried out business transformation, gradually divested low-margin businesses, and focused on digital empowerment of the main design business. AECOM's development strategy has also been recognized by the capital market. The company's stock price usually outperforms the NYSE Composite Index in stages after successful mergers and acquisitions; after implementing the transformation, the stock price continued to rise and recently reached a record high.
Endogenous and epitaxial two-wheel drive, consolidating the leading position in comprehensive design. According to the company's plan, after listing, development will be achieved through strategies such as enhancing existing business collaboration capabilities through integrated development, expanding business areas using “traditional business empowerment support+weak basic business incubation and mergers and acquisitions”, optimizing market layout and expanding overseas. The implementation path includes endogenous and extrinsic: 1) Endogenous development:
Focus on the development of the main design industry and actively implement digital transformation to enhance the company's competitiveness and profitability in the design field; 2) Asset injection+extended mergers and acquisitions: The future may expand the company's design industry through various methods such as asset restructuring, business integration, and mergers and acquisitions, and continue to expand its market share and brand influence.
Risk warning: Business integration risk after transaction completion, risk caused by macroeconomic cycle fluctuations, accounts receivable recovery risk.