\u3000\u3000 Shaanxi Construction Engineering Group Corporation Limited(600248) (600248)
Undervalued local construction leaders, carbon neutralization and professional chemical industry also have layout
The company is a leading construction enterprise in Shaanxi, with 15 special engineering qualifications. Driven by the increase in the share of cities in the province and the increase in orders outside the province, the net profit of 21-23 years is CAGR + 15%, corresponding to only 3.65 times of PE in 22 years. In addition to engineering business, the company also arranges distributed photovoltaic operation (share in Shaanxi Branch Energy), carbon trading (share in Shaanxi environmental rights exchange), phosphorus chemical and Petrochemical (BDO production) projects. In 2020, roe was 30.34%, 22.85 percentage points higher than the average value of comparable companies, mainly due to the high asset liability ratio. The company plans to introduce investors to increase capital and expand its subsidiaries (about 3.5 billion yuan) to reduce the asset liability ratio. Subsequent or acquisition of equity held by investors by means of convertible bonds and equity replacement, with good performance and release power. In the 21st year, it is planned to sign 320 billion yuan of new contracts (165.4 billion yuan in 21h1, which is 2.14 times of the revenue), which is + 16.4% compared with the same period in the 20th year. It also ensures the smooth release of performance, and realizes an operating revenue of 140 billion yuan (117.8 billion yuan in 21q1-3 revenue), which is + 9.6% compared with the same period in the 20th year. It is expected or exceeded.
Shaanxi’s “14th five year plan” is firmly in the forefront, with population inflow supporting construction investment intensity
In 2022, Shaanxi arranged 620 provincial key projects, with a year-on-year increase of + 14.4% (the base is completed in 21 years, the same below), and the annual planned investment is 462.9 billion yuan, with a year-on-year increase of + 7.8%. The company’s income is mainly from housing construction. Shaanxi plans to renovate 1 million old residential areas in the 14th five year plan, which will become the main force of urban renewal. The population inflow (the new population of Liupu is 1.96 million, year-on-year + 5.5%) will increase the demand for hospitals and schools, and also increase the construction investment intensity; Supplemented by infrastructure business, Shaanxi plans to complete the transportation investment of 500 billion yuan in the 14th five year plan, with a year-on-year increase of + 8.7% (the base is completed in the 13th five year plan, the same below). The total planned highway mileage is 190000 kilometers (+ 5.56%), including 7000 kilometers of high-speed (+ 13.43%), 6500 kilometers of Railway (+ 7.79%) and 422 kilometers of rail transit (+ 72.95%); In terms of absolute growth rate, high-speed railway and other subdivided fields still have rapid development.
The market share in the province is expected to increase continuously, and overseas orders outside the province are increasing rapidly
The regional structure is mainly within the province. In the first half of 2021, construction enterprises above the qualification level in Shaanxi Province signed a total of 1409.3 billion yuan of contracts, and the company signed 118.4 billion yuan of new contracts (accounting for 8.4% of the market). Deep ploughing in Shaanxi has realized the full coverage of localized companies in all cities and major districts and counties; Superimposed on the background of state-owned enterprises, the cooperation between government and enterprises is smooth. Cooperation agreements have been signed with Weinan Transportation Bureau, Xi’an high tech Zone and Crrc Corporation Limited(601766) to carry out business in many fields such as expressway, urban road construction, demolition and resettlement, urban infrastructure construction and so on; The growth rate of new orders outside the province is expected to be higher than the growth rate of new orders outside the province (H1 + 21 + 29%) by 21% year-on-year. The advantageous business has developed steadily, and the space for carbon neutralization is broad. It is covered for the first time. We are given a “buy” rating. We are optimistic about the steady development of the company’s traditional business, and the space for carbon neutralization is broad. The company also has a layout. It is estimated that the company’s net profit attributable to the parent company from 21 to 23 years is 5.20/60.1/6.92 billion, CAGR + 15%, corresponding to eps1.5% 41 / 1.63/1.88 yuan. At present, the 22-year wind of the comparable company unanimously expects the average PE to be 5.95 times. Considering the stable growth of the company’s construction business in the future and the rapid growth of net profit, the 22-year PE is given 6 times, corresponding to the target price of 9.77 yuan. It is covered for the first time and given a “buy” rating.
Risk tips: housing, transportation and other construction investment is less than expected, market expansion is less than expected, bad debt and impairment provision risks, performance compensation litigation, etc
