Revenue grew steadily, and net profit was briefly under pressure
The company achieved revenue of 73.02 billion yuan in 2008, +3.3% year-on-year, with net profit attributable to mother and net profit of 22.92 billion yuan, -15.2% and -14.4% year-on-year. Of these, Q4 achieved revenue of 27.46 billion yuan in a single quarter, +13.7% year-on-year, and net profit attributable to mother and 740 million, -13.6% and -24.1% year-on-year. Of this, non-recurring profit and loss for the year was 270 million, a year-on-year decrease of 70 million. The brief pressure on net profit was mainly due to an increase in expense ratios and an increase of 500 million in asset and credit impairment losses over the same period last year. The company plans a cash dividend of 280 million yuan (tax included) for 23 years, with a dividend ratio of 9.4%, corresponding to the closing dividend rate of 3.23% on April 12.
Refined management led to a relatively rapid increase in gross profit margin. Road and bridge construction and road and bridge maintenance achieved revenue of 638.5 billion and 4.47 billion yuan respectively in 23 years. Among them, the gross margin for road and bridge construction was 12.38%, up 0.66 pcts year on year, driving overall gross margin up 0.74 pct to 12.93% year on year. The gross margin for Q4 was 14.31%, up 0.14 pct year on year. In '23, the company achieved a bid amount of 118.69 billion yuan, accounting for 73% of the annual bid amount, and the traditional market was consolidated; at the same time, overseas engineering contracting capacity was enhanced, focusing on dominant regions in Africa and Eastern Europe, focusing on tracking the Central Asian and Southeast Asian markets, and winning bids for multiple projects in Tanzania for the first time. For the first time, overseas revenue was 4.42 billion yuan, an increase of 1.51% over the previous year. We are optimistic that the overseas market will gain further strength.
Impairment losses have increased, and cash flow needs to be improved
The cost rate for the 23-year period was 6.52%, an increase of 0.96pct over the previous year. The sales, management, R&D, and financial expense ratios were 0.01%, 2.31%, 3.03%, and 1.17%, respectively. The year-on-year changes were +0.0pct, -0.05pct, +0.44pct, and +0.57pct. Among them, financial expenses increased 101.26% year over year, mainly due to the increase in the size of interest-bearing debt. Asset and credit impairment losses were $720 million and $30 billion, respectively, up $440 million and $0.7 billion, and a total increase of 500 million yuan year-on-year. The main reason was that contract assets and accounts receivable increased by 113.33 billion yuan year-on-year, leading to an increase in accrued impairment preparations; net interest rates fell 0.67 pct to 4.21% year on year under the combined impact. The net amount of CFO in '23 was -3.96 billion yuan, with an increase of 4.11 billion yuan over the previous year. The current revenue and payment ratio changed +3.06 pct and +8.81 pct year on year, respectively. Local finances are under pressure, the settlement cycle has been lengthened, and the settlement ratio has been drastically reduced, making cash flow pressure obvious.
Ongoing orders fully guarantee the momentum for performance growth, maintain “buy” rating companies to continue to consolidate the Shandong market, and at the same time increase their development in markets outside the province and abroad, and maintain rapid growth in new orders. Considering that high pressure on local debt may cause the project to land more slowly, we lowered the company's profit forecast. We estimated net profit to be 24.2, 26.2, and 2.86 billion yuan (previous value of 2,97/3.42 billion yuan in 24 and 25 years), corresponding PE of 3.6, 3.3, and 3.0 times. Approval gave the company 5 times PE in 24 years, and the corresponding target price was 7.76 yuan, maintaining the “buy” rating.
Risk warning: Infrastructure investment is weaker than expected, risk of impairment, and the pace of implementation and implementation of REITs supporting policies falls short of expectations.