Introduction to this report:
The company is promoting the transformation and upgrading of “traditional construction” to an integrated business development model of “investment, finance, construction and transportation”. In 2024, it will accelerate the increase in the proportion of non-construction businesses in terms of business structure, and launch a new round of state-owned enterprise reform and deepening and upgrading actions.
Key points of investment:
Maintain the increase in holdings. The performance was slightly lower than expected. The 2024-2025 EPS forecast was lowered to 1.04/1.18 yuan (originally 1.13/1.32 yuan), and the forecast is that EPS will increase 13% by 1.34 yuan in 2026. Reference is that comparable companies will give 7.2 times PE in 2024 and maintain the target price of 7.5 yuan.
Net profit increased slightly below expectations by 13% in 2023, and net operating cash flow improved significantly year over year. (1) Revenue of 91.2 billion yuan in 2023 increased 14% (Q1-Q4 increased 11/11/11/ 19%), of which infrastructure/housing/real estate 396/320/7.2 billion yuan increased 8/27/ -6%; net profit to mother increased 13% to 1.55 billion yuan (Q1-Q4 increased 11/-0.1/32/ 9%). (2) Gross profit margin 11.67% (+0.49pct), weighted ROE 11.41% (-0.35pct), balance ratio 86.0% (+1.4pct). (3) Accrued impairment of 2.19 billion yuan (1.11 billion yuan last year), net operating cash flow of 3.67 billion yuan (last year - 780 million yuan), and investment cash flow of 4.62 billion yuan (last year - 2.81 billion yuan).
New signings of 151.1 billion yuan increased 14% in 2023, with the Q4 growth rate increasing significantly from month to month. (1) In 2023, new construction contracts of 151.1 billion yuan increased 14% (Q1-Q4 increased 17/5/-3/ 32%), of which infrastructure projects and investment of 98.2 billion yuan increased 18% (65%), and housing construction projects of 52.9 billion yuan increased 6% (35%). (2) In terms of infrastructure engineering by business, road and bridge projects increased by 21% (33%); municipal engineering of 42.6 billion yuan increased by 22% (28%); water conservancy projects of 4.4 billion yuan decreased by 26% (3%); port and shipping projects of 1 billion yuan increased by 61% (0.6%).
Promote the transformation and upgrading of “traditional construction” to an integrated business development model of “investment, finance, construction and transportation”. (1) In 2024, the plan is to achieve a 6.9% increase in revenue of 97.5 billion yuan, and a 6.5% increase in total profit of 2.8 billion yuan. (2) Accelerate the increase in the proportion of non-construction business on the basis of maintaining total volume growth. (3) Launch a new round of state-owned enterprise reform and deepening and upgrading actions. Affiliated enterprises will fully implement the appointment of personnel, and fully complete the task of streamlining institutions and personnel by the end of 2024. (4) The proposed dividend dividend rate is 5.25%, and the dividend payment rate is 29%.
Risk warning: macroeconomic policies have been tightened beyond expectations, infrastructure investment has fallen short of expectations, etc.