Performance continued to grow in the first half of the year, diversified business layouts progressed steadily, maintained a “buy” rating and released the 2023 semi-annual report on subway design, and the company's revenue and profit maintained double growth. The company relies on the Guangzhou Metro, has urban rail transit survey and design business as its main business. It has rich qualifications in many fields, leading the industry with technical advantages, and a contract holding scale of over 10 billion dollars. The diversified layout of energy saving and environmental protection, park design, TOD and energy storage businesses is progressing steadily, and it is optimistic that the company's performance will continue to be released. The company's net profit increased for six consecutive years, and the performance target was exceeded for two consecutive years. We maintain our profit forecast. We expect the company's net profit to be 511, 6.18, and 697 million yuan respectively from 2023-2025. The corresponding EPS is 1.28, 1.55, and 1.74 yuan, and the corresponding PE at the current stock price is 15.1, 12.5, and 11.0 times, maintaining the “buy” rating.
Revenue profit achieved double growth. The share of the survey and design business declined. The company achieved operating income of 1,233 billion yuan in the first half of the year, up 8.23% year on year; achieved net profit of 214 million yuan, up 11.06% year on year; gross margin and net interest rate increased to 39.3% and 17.5% respectively (33.1% and 16.4% in 2022); achieved earnings per share of 0.53 yuan, net operating cash flow of -60 billion yuan, a year-on-year decrease of 47.93%, mainly due to a decrease in accounts receivable repayment. Among the main business, the core business of survey and design accounted for 85.0% of revenue, and the share of revenue from planning consulting and general engineering contracting business increased, to 8.57% and 6.34%, respectively.
Advanced rail transit innovation technology leads the industry, diversified business development and new growth points. As the first A-share listed company with urban rail transit engineering consulting as its main business, the company has rich design and development qualifications, and has mastered innovative rail transit technology based on digitalization, intelligent simulation, BIM, smart cities, and green energy-saving technology. In the first half of the year, the company carried out the design tasks of 45 general contracting and design general contract lines and 13 consulting lines in 46 cities across the country in an orderly manner. At the same time, it actively promoted various rail transit support services. While deeply involved in Guangzhou, it ensured that it maintained its position and market influence in the first echelon of design in South China, Central South China, and Western China. It won bids for new projects in 11 cities including Guangzhou, Shenzhen, Wuhan, Changsha, Hangzhou and Jinan.
At the non-rail transit business level, the company focuses on the non-rail transit business layout at the municipal level in Guangzhou, and has reached strategic cooperation intentions with relevant state-owned enterprises in the fields of parks, land development and environmental protection businesses. At the investment management level, the company wholly-owned Guangzhou Kehui Energy Company to lay out rail transit new energy and environmental protection business. At the same time, it participated in the establishment of the Guangzhou Energy Storage Group to lay out a new energy storage industry and expand new profit growth points.
Risk warning: Increased competition in the industry, new expansion orders falling short of expectations, risk of accounts receivable delays.