Revenue declined slightly and profitability increased, leading the rail transit design industry, maintaining the “buy” rated urban construction design results for the full year of 2023. As a leader in the field of urban rail transit design consulting, the company insists on expanding design consulting and actively expanding new businesses, and will benefit from the dividends of urban rail development for a long time. Affected by the contraction in the scale of engineering contracts, we lowered the 2024-2025 scale and added a profit forecast for 2026. We expect the company's net profit to be 941, 10.71, and 1,117 billion yuan (2024-2025 original values of 13.73 billion yuan and 1,667 billion yuan) respectively, corresponding to EPS of 0.70, 0.79, and 0.83 yuan. The current stock price corresponding to PE valuations is 2.5, 2.2, and 2.1 times, respectively. The company's sufficient contract amount helps to continue to release performance and maintain the “buy” rating .
Revenue declined slightly, profitability increased, and minority shareholders' profit and loss increased; the company achieved revenue of 10.362 billion yuan, or -0.7% year over year; realized net profit attributable to shareholders of 883 million yuan, -9.0% year on year; achieved net operating cash flow of 329 million yuan, gross margin and net interest rate increased by 0.65 and 0.18 pct to 18.21% and 8.79%, respectively, with a profit of 0.65 yuan per share, and a final dividend of 0.1724 yuan per share. The decline in the company's revenue was mainly due to a decrease in the volume of construction in the engineering contracting sector, and the decline in net profit to mother was mainly due to the year-on-year increase in minority shareholders' profits.
Survey, design and consulting revenue both increased in profit. The design, survey and consulting business revenue of leading companies in the rail transit design industry was 4.867 billion yuan in 2023, up 4.21pct to 47.0%. Among them, the revenue share of the urban rail transit sector, civil construction and municipal finance sectors increased by +9.14% and 8.91%, respectively, and gross margin increased 0.29pct to 29.10% year on year. The company won bids for a total of 6 overall design projects in Beijing, Shenzhen, Hangzhou and other places during the year. The number of bids won was the highest in the industry, and the rail transit design industry took the lead. The company's engineering contracting business revenue in 2023 was 5.495 billion yuan, -8.0% year-on-year. The decline was mainly due to a decrease in the number of ongoing projects started, and it won bids for projects such as the Lize City Terminal Integrated Transportation Hub during the year. The amount of the company's mid-bid project in 2023 was 6.168 billion yuan. The design, survey and consulting business and engineering contracting business were 4.498 billion yuan and 1.67 billion yuan respectively. As of the end of 2023, the contract amount in hand was 26.662 billion yuan, which can cover about 2.6 times the 2023 revenue.
Actively expand new business and make every effort to push back to A listing
The company plans to focus on new franchise policy trends, develop investment directions such as cultural tourism tracks, technology industry, digital products, passenger and cargo railways, urban renewal, ecological environment, new energy, and new infrastructure, and strive to land new investment projects. The company made every effort to push back to the A listing process. It received an acceptance letter from the Shanghai Stock Exchange in December 2023, and proposed extending the validity period of the A share IPO shareholders' meeting resolution for 12 months in January 2024.
Risk warning: Competition in the industry intensified, Xintuo's orders fell short of expectations, and the return to A listing schedule fell short of expectations.