Events:
On March 6, the company released its 2022 annual report. In 2022, the company's annual revenue was 3.289 billion yuan, down 11.2% from the same period last year, and the net profit was 453 million yuan, down 69.1% from the same period last year. Excluding the divestment of Hanxiao Expressway and Jinxiong Expressway and Humen Bridge, it decreased by 40.3% compared with the same period last year. Among them, the income in the second half of 2022 was 1.87 billion yuan, and the return net profit was 158 million yuan, down 84.15% from the same period last year, mainly due to the control of epidemic situation and the influence of Q4 truck toll reduction policy.
The income of Wei Xu Expressway and Sui Yue Nan Expressway are growing against the trend.
In 2022, the company achieved 3.193 billion yuan in toll income, of which only Weixu Expressway and Sui Yuenan Expressway achieved positive growth. Weixu Expressway and Suiyue Nan Expressway achieved income of 390 million yuan and 632 million yuan respectively, an increase of 11.6% and 2.9%, respectively, mainly due to the transfer of trucks on the surrounding roads to the above sections due to epidemic control and maintenance construction, resulting in the extension of truck flow and traffic distance. The income of Hubei Hancai, Han-E and Daguangnan all decreased by more than 10%, of which Han-E was most significantly affected by the diversion of E-Xian Expressway, with income of 151 million yuan in 2022, down 27.7% from the same period last year.
The increase in amortization costs leads to an increase in operating costs.
In 2022, the company's operating cost was 1.553 billion yuan, an increase of 5.0% over the same period last year, of which amortization expenses, employee costs, highway maintenance expenses and operating expenses were 1.146 billion yuan, 159 million yuan, 120 million yuan and 110 million yuan, respectively, representing year-on-year changes of 8.0%,-4.3%,-1.4% and 3.6%. The increase in amortization expense is mainly due to the company's adoption of the depreciation method of predicted traffic flow, which leads to a continuous increase in amortization expense in the case of a year-on-year decline in traffic flow in 2022. The financial cost of the company is strictly controlled. The financial expense in 2022 is 625 million yuan, a decrease of 15.8% compared with the same period last year. The overall weighted average interest rate is 3.60%, which is 0.27% lower than that in 2021.
In 2022, the company paid an annual dividend of HK $0.20 per share, with a dividend rate of about 64.4%. It is expected that the company's future dividend rate will remain in the range of 50%, 60%.
Earnings forecast, valuation and rating
We estimate that the company's operating income from 2023 to 2025 will be 38.96 yuan, 41.21 / 4.356 billion yuan, respectively, with a corresponding growth rate of 8.84%, 5.77% and 5.71%, respectively. The net profit of homing is RMB 9.56, 10.15 / 1.018 billion, respectively, and the corresponding growth rate is 110.98%, 6.14%, 0.35% and 0.61 yuan per share, respectively, and the corresponding PE is 6.89x/6.49x/6.47x. Based on the Expressway Industry report Series (1):
According to the forecast of the company in the Review and Prospect of China Highway Industry, and with reference to the comparable company valuation, the company is given a "buy" rating of 9.5x PE in 2023, corresponding to the target price of HK $6.2m.
Risk hint: the launch speed of Ezhou airport is not as fast as expected; the traffic flow growth rate is lower than expected due to the diversion of road network, and the industry charging policy changes.