Incidents:
In 2023, the company achieved operating income of 40.683 billion yuan, a year-on-year increase of 110.40%; realized net profit to mother of 11.546 billion yuan, and a loss of 576 million yuan for the same period in 2022. In Q1 2024, the company achieved operating income of 10.106 billion yuan, an increase of 13.06% over the previous year; net profit to mother was 2,963 billion yuan, an increase of 33.11% over the previous year. In 2023, the company paid a cash dividend of 0.11 yuan per share, with a dividend rate of about 47.47%.
Passenger flow is recovering at an accelerated pace, driving the company's revenue upward
Benefiting from the upward trend in railway passenger transport, the company achieved total operating revenue of 40.683 billion yuan in 2023, an increase of 110.40% over the same period last year. Of these, passenger transport business/ road network services achieved revenue of 160.82/24.223 billion yuan respectively. In 2023, the Beijing-Shanghai High Speed Rail Main Line carried 53.252 million passengers, an increase of 209.1%; the operating mileage of cross-line trains completed 92.044 million kilometers, an increase of 66.2%; 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 2023, Beijing-Fu-Anhui lost 968 million yuan, a year-on-year loss of 1,826 million yuan over 2022.
Costs are linked to transportation volume, increasing 32% year over year in 2023
In 2023, the company's main business cost was 22.052 billion yuan, an increase of 31.91% year-on-year. Among them, energy expenses/train usage fees were 40.46/4.627 billion yuan, up 51.87%/95.87% year on year respectively, mainly due to the increase in passenger traffic volume and train operation on the company's routes; commissioned transportation management fees were 5.820 billion yuan, an increase of 14.92% year on year. The gross margin of the company's main business in 2023 was 45.29%, benefiting from high revenue growth and a year-on-year increase in gross margin of 33.41 pcts.
The company's performance in Q1 2024 exceeded expectations. It is proposed to implement a share repurchase plan, and passenger demand will continue to be high since 2024, driving the company's Q1 revenue to increase 13.06% year on year, and net profit to mother up 33.11% year on year. Jingfu Anhui lost 46 million yuan in Q1, a decrease of 198 million yuan compared with Q1 in 2023. The company plans to use its own capital of RMB 1 billion to repurchase shares. The maximum repurchase price is 5.87 yuan/share, demonstrating confidence in future development.
Profit Forecasts, Valuations, and Ratings
The company's revenue for 2024-2026 is estimated to be 447.19/488.04/53.269 billion yuan respectively, with year-on-year growth rates of 9.92%/9.14%/9.15% respectively; net profit to mother of 134.52/154.49/17.463 billion yuan, respectively, with year-on-year growth rates of 16.52%/14.85%/13.03%; EPS of 0.27/0.31/0.36 yuan respectively. Given that the company's route assets have significant location advantages and a good passenger flow base, referring to comparable company valuations, the company was given 23 times PE in 2024, corresponding to a target price of 6.21 yuan, to maintain a “buy” rating.
Risk warning: Tourist travel demand is declining; there is a risk of changes in fare policies.