The company announced 2023 and 24Q1 results: In 2023, the Beijing-Shanghai High Speed Rail recorded operating income of 40.683 billion yuan, an increase of 110.40% over the previous year, and recorded a net profit of 11.546 billion yuan to mother, turning a loss into a profit from 2022. In 24Q1, the company recorded operating income of 10.106 billion yuan, an increase of 13.06% over the previous year, and recorded net profit of 2,963 billion yuan to mother, an increase of 33.11% over the previous year.
In 2023, the railway industry's passenger traffic and turnover increased dramatically year-on-year, and the Beijing-Shanghai high-speed rail passenger traffic growth rate exceeded the industry level. In 2023, the national railway completed passenger traffic of 3.855 billion people, an increase of 130.4% over the previous year, and completed passenger turnover of 1472,936 billion people kilometers, an increase of 123.9% over the previous year. In the same period, the Beijing-Shanghai High Speed Rail Main Line carried 53.252 million passengers, an increase of 209.1% over the previous year; the operating mileage of cross-line trains reached 92.044 million kilometers, an increase of 66.2% over the previous year.
In 2023 and 24Q1, the company's gross margin returned to normal levels. In 2023 and 24Q1, the company's gross margin was 45.8% and 46.2%, respectively, a significant increase over the previous year. There is still a gap with the gross margin of 51.1% in 2019. We believe that with the resumption and development of the company's transportation business and the “increase revenue, savings and consumption reduction” strategy, the company's gross margin is expected to increase steadily.
Profit situation of Jingfu Anhui: In 2023, Jingfu Anhui Company drastically reduced losses and recorded a net loss of 968 million yuan. The company's net loss in 2022 was 2,795 million yuan. In 2023, the operating mileage of trains on the Beijing-Fu-Anhui route reached 35.595 million kilometers, an increase of 53.7% over the previous year.
In 24Q1, Jingfu and Anhui's losses narrowed further. We believe that by 2024, Beijing, Fujian, and Anhui are expected to achieve break-even.
The promised dividend ratio is 50%: The company announces a dividend plan for the next 3 years (2022 to 2024). When the company has no major investment plans or major cash expenses, the accumulated profit distributed in cash every year should be 50% of the distributable profit achieved by the parent company in the current year.
Repurchase plan: In order to maintain the company's value and shareholders' rights and boost investor confidence, the company plans to repurchase 1 billion yuan of shares through its own capital, at a price of no more than 5.87 yuan/share.
Profit forecast and investment advice: As a transportation corridor and economic bridge connecting the north and south, the Beijing-Shanghai High Speed Rail has gold line assets, building a good foundation for steady growth in performance. We believe that the marketization of ticket prices will contribute flexibility to the main line business, and that the continuous improvement of the high-speed rail network will contribute to the increase in cross-line business. We estimate that the company's 2024-2026 EPS will be 0.27/0.29/0.30 yuan respectively, giving the company 2024E 22x PE, corresponding to a reasonable target price of 5.87 yuan. Maintain an “better than the market” rating.
Risk warning: economic downturn, sharp rise in energy prices, lower passenger occupancy rate and number of cross-line trains than expected, diversion of other road networks, etc.