The leading infrastructure construction enterprise in Shanghai has significant advantages in integration. The controlling shareholder of the company is Shanghai Urban Construction (Group) Co., Ltd., and the actual controller is the Shanghai State-owned Assets Administration Commission. As a leader in the entire domestic infrastructure construction industry chain, the company has shown significant advantages in various fields such as investment, design, construction and operation.

According to the company's financial report, 18-23 revenue CAGR +15%, net profit CAGR +8.4%, leading the industry average in cash flow and overall gross margin. The net present ratio remained above 1 year-round, and the dividend rate remained above 30% year-round (24.6% in '23), so the dividend advantage was obvious.

Traditional main businesses are growing steadily, and light and heavy assets are concurrently creating a second growth curve. According to the company's financial report, in 2023, the company signed a new order of 95.38 billion yuan, +14.11% year-on-year. The main business growth is still steady against the backdrop of Yangtze River Delta integration and the acceleration of Shanghai's urban renewal. Operating business aspect: The company's operating business revenue CAGR +62.0% in 19-23. Asset-heavy operation: The company currently mainly participates in domestic urban infrastructure construction investment and operation through PPP, BOT, etc., and investment projects are gradually entering the operation period; asset-light operation: the subsidiary Chengdun Tunnel integrates Shanghai Tunnel's rich resources and core technology in underground engineering construction and safety maintenance. Revenue in 2023 was 0.61 billion yuan, or +42.7%. The company is expected to create a second growth curve in the operation and maintenance business.

Focus on new quality productivity, and data elements help revalue the company. In December '23, the “Data Elements ×” Three-Year Action Plan (24-26)” proposed targets such as the average annual growth rate of the data industry exceeding 20% by the end of '26. According to data from the National Industrial Information Security Development Research Center, China's data element market is estimated to reach 114.4 billion yuan/142.6 billion yuan respectively in 23/24. The company's subsidiary, Urban Construction Operation Group, has accumulated rich operational maintenance data, while Digital Group is mainly responsible for data analysis and processing. At present, the company has established a “1+6+N” smart management system and won bids for several digital construction and transformation projects. According to the company's financial report, digital business revenue in '23 was 0.317 billion yuan, and 24H1 was newly signed 0.231 billion yuan. Smart city construction and digital transformation continue to accelerate.

Profit forecast and investment advice: The company's net profit for 24-26 is expected to be 31.94, 3.517/3.879 billion yuan, respectively. Considering the company's own growth rate and historical valuation center, the company is given a PE valuation of 8 times in 24 years, corresponding to a reasonable value of 8.13 yuan/share. For the first time, coverage is given, and a “buy” rating is given.

Risk warning: Infrastructure investment is slowing down, digital expansion falls short of expectations, and project commissioning falls short of expectations.