Optimistic about the long-term pricing power, upgrade the rating to "overweight". The proportion of automobile fares in the income of the blue-collar class of the main consumer groups is decreasing year by year, and the network effect and line monopoly determine the competitive barriers and pricing power. Maintain the 2014 EPS0.59 yuan, consider the network value created by the company's 10-year acquisition strategy, refer to the industry average PE28 times, carefully value 24 times PE, and raise the target price to 14.16 yuan.
Essential consumer goods for blue-collar workers to travel. The company's passenger fare pricing level is 0.22 yuan per kilometer, and the average ticket income is 23 yuan per person. With the rise of the income of blue-collar workers, the proportion of ticket prices in their income gradually decreases. Although high-speed rail diverts middle and high-end customers, road passenger transport, as the cheapest means of transportation, is still the blue-collar first choice. Companies can achieve structural price increases through different routes and booking times. The profit per passenger is only 2.02 yuan, which on the one hand determines the sensitivity of future profits to fares, and also shows that the feasibility of new value-added services such as advertising and WIFI can be explored in the future.
Where there is the Internet, there are barriers. Long-distance passenger transport is generally granted the franchise of shuttle buses by the owners of stations at both ends, and rising oil prices and government subsidies have led to the withdrawal of most black cars from the market. When the enterprise obtains the management right of both ends of the station and the opposite shuttle bus at the same time, it will constitute a competitive barrier and network effect.
The ten-year acquisition strategy forms a provincial network. Before the IPO in 2013, ROE was close to 15%, significantly higher than its peers. It has adhered to the acquisition strategy over the past decade, owning 8 stations in 11 prefecture-level cities in Jiangxi.
The annual operating cash flow of more than 300 million and potential compensation for collection and storage provide financial guarantee for the strategy.
High-speed rail suppresses short-term pricing power and is only suitable for long-term vision. The gradual construction of high-speed rail has suppressed the company's pricing power. The new station will not be put into production until the second half of the year, so the return on the funds raised cannot be reflected for the time being. Therefore, this is a company that is only suitable for long-term investment vision.
Risk tips: higher-than-expected high-speed rail diversion, losses at new stations, and safety risks.
