Event description
The company released its mid-2023 report, with revenue of 37.473 billion yuan in the first half of the year, an increase of 11.23%, and a net profit of 656 million yuan, an increase of 5.64%. Realized deduction of non-attributive net profit of 709 million yuan, an increase of 23.82%.
Event comment
On the revenue side, the company achieved revenue growth in the first half of the year, including a decline in revenue from infrastructure projects and investment, an increase in revenue from housing construction, and a significant increase in revenue from real estate development. The income in the first half of 2023 increased by 11.23%, mainly due to the increase in real estate delivery and construction income. From a business point of view, the engineering construction business realized income of 27.837 billion yuan, an increase of 4.90%, a gross profit margin of 8.30%, a year-on-year change of 0.09pct, of which infrastructure and investment income was 15.994 billion yuan, a year-on-year change of-1.95%, a gross profit margin of 9.37%, and a year-on-year change of 0.11pct. The income from housing construction projects was 11.843 billion yuan, a year-on-year change of 15.83%, a gross profit margin of 6.85%, and a year-on-year change of 0.31pct. The company's real estate business realized operating income of 3.613 billion yuan, an increase of 52.15%, a gross profit of 345 million yuan, a gross profit margin of 9.54%, a year-on-year change of-15.35%, a contracted sales area of 45900 square meters, and a contracted sales amount of 4.419 billion yuan. During the reporting period, the company added 207.5 mu of land reserve area and 361mu of land reserve area at the end of the period.
Profitability: the gross profit margin increased in the first half of the year, the rate of sales and financial expenses increased, the net income on investment decreased significantly, and the attributable net profit rate decreased. The attribution net interest rate is the same as decreasing 0.09pct, mainly due to: 1) the expense rate during the period increased by 0.04pct to 7.34%; 2) the net investment income decreased by 133 million yuan to-130 million yuan; 3) the asset impairment loss increased by 53 million yuan to 59 million yuan; 4) the credit impairment loss increased by 153 million yuan to 75 million yuan; and 5) the income tax rate also increased by 5.61pct to 25.83%.
Operation quality: the net outflow of operating cash flow increased, the cash-to-cash ratio increased, and the cash-to-cash ratio decreased compared with the same period last year. In the first half of the year, the company's net operating cash inflow was 1.693 billion yuan, an increase of 4.979 billion yuan over the same period last year, mainly due to the decrease in net outflow of PPP projects and the increase in net inflow of real estate, while the net outflow of investment cash outflow was 1.363 billion yuan, 1.176 billion yuan more than the same period last year, mainly due to the increase in expenditure on the construction of highway projects invested. The ratio of receipt to cash changed 8.36pct and-8.08pct to 114.42% and 110.69% respectively. The asset-liability ratio of 2023H1 is 84.87%, with an increase of 0.41pct.
The newly signed orders for infrastructure construction increased significantly in the first half of the year, followed by or fully benefited from the growth of infrastructure investment in Anhui Province. 1) the infrastructure sector of newly signed orders increased significantly in the first half of the year, mainly in municipal and port and shipping projects. The total value of newly signed contracts in 2023H1 was 74.813 billion yuan, an increase of 10.59% over the same period last year. The newly signed contracts for infrastructure projects totaled 53.381 billion yuan, an increase of 25.35% (including 19.272 billion yuan for highways and bridges,-18.41% from the same period last year, 32.099 billion yuan for municipal projects, 87.89% for water conservancy projects, 1.21 billion yuan for water conservancy projects, and 800 million yuan for port and shipping projects. Compared with the same period last year, the newly signed contracts for housing construction projects totaled 21.432 billion yuan,-14.49 percent from the same period last year. The contracted sales of real estate development totaled 4.419 billion yuan, with an increase of 120.29%. According to the 2023 investment plan announced in Anhui, investment in fixed assets in the province is expected to grow by more than 10% in 2023. Of this total, investment in urban renewal, road, water, airport and rail transit, water conservancy, energy, and ecological environmental protection related to infrastructure sector totaled 630 billion yuan, an increase of 17% over the same period last year. For the whole year, benefiting from the sustained and rapid development of infrastructure in Anhui Province and the continuous implementation of policies related to steady growth, the company is expected to continue its high growth rate, and is expected to achieve a net profit of 16.6 and 1.99 billion yuan in 2023 and 2024, corresponding to the current closing price PE of 5.2,4.3 times, respectively, with a "buy" rating.
Risk hint
1. The policy is not as advanced as expected.
2. The price of raw materials fluctuates greatly.