Daqin Railway Co.Ltd(601006) (601006)
In November 2021, the company's core asset Daqin line completed 38.16 million tons of cargo transportation, with a year-on-year increase of 0.98% and an average daily transportation volume of 1.272 million tons. An average of 84.8 heavy trains are operated on Daqin line, including 64.8 20000 ton trains. From January to November 2021, the total cargo transportation volume of Daqin line was 381 million tons, with a year-on-year increase of 3.91%.
Key investment points
The traffic volume recovered after the repair in autumn, and the average daily traffic volume of Daqin line increased by 20% month on month in November
Taiyuan Bureau of State Railway Group fully coordinates and cooperates with coal supply guarantee, timely gives early warning of strong cooling weather and implements freezing damage inspection to ensure smooth coal supply guarantee and transportation after autumn repair of Daqin line. According to Xinhua news agency, under the disturbance of snowfall factors in coal producing areas, the daily non construction traffic volume of Daqin line is still more than 1.3 million tons, the daily construction traffic volume is more than 1.1 million tons, the monthly average daily traffic volume is 1.27 million tons, an increase of 20.0% month on month, a slight increase of 1.0% year-on-year, and the traffic volume recovers rapidly.
Solid progress has been made in ensuring the supply and transportation of power coal. It is estimated that the annual transportation volume of Daqin line is about 420 million tons
After the autumn repair of the Daqin line on the supply side, the shackles of transportation capacity were lifted. With the superposition of policies, China Railway Group focused on ensuring the supply and outward transportation of coal in the Sanxi region and dispatching more railway freight shifts. The transportation volume of the Daqin Line recovered rapidly in November, the coal inventory of corresponding ports and terminal power plants rebounded to a relatively high level, and the total coal inventory of Qinhuangdao port and Caofeidian port exceeded 9.5 million tons. The "La Nina" phenomenon in the peak period of coal consumption in winter in the North has caused the cold winter effect, and the coal demand is expected to remain strong. Therefore, if the daily average traffic volume of Daqin line in December remains at a relatively high level of about 1.25 million tons, the annual traffic volume will be 420 million tons, with a year-on-year increase of 3.8%.
In the long run, environmental protection policies such as dual control of energy consumption and carbon neutralization have a slight impact, and there is still room for traffic volume improvement
Environmental protection policies such as dual control of energy consumption and carbon neutralization may affect the overall coal demand, but in the long run, the transportation volume of Daqin line is still supported by "three layers of safety cushion": 1) the coal source structure is adjusted, the coal producing areas continue to concentrate in the three West regions, and the regional advantages are consolidated Daqin Railway Co.Ltd(601006) the main business moat; 2) The transportation structure is adjusted, the transfer from public to railway is continuously promoted, and the state railway group cooperates with local governments and enterprises to promote the incremental action of railway freight; 3) The diversion of competitive lines is weak. Compared with the four main lines of West to east coal transportation, the transportation cost advantage of Daqin line still exists. With the centralized coal source, the transfer of bulk transportation to rail and the resonance of low transportation cost, the Daqin line has sufficient support at the demand end.
From 2020 to 2022, the cash dividend per share shall not be less than 0.48 yuan, supporting the absolute income
According to the company's dividend return plan for 2020-2022, the annual cash dividend per share shall not be less than 0.48 yuan / share. The commitment will be fulfilled in 2020, with a dividend of 4.8 yuan for 10 shares, with a dividend proportion of 65.5%. The dividend income of the company corresponding to the current closing price (2021 / 12 / 7) in 2021 can reach 7.8%, and the bottom absolute income.
Profit forecast and valuation
Assuming that the traffic volume of Datong Qinhuangdao railway increases steadily and the freight rate adjustment is not considered temporarily, we expect the net profit attributable to the parent company to be RMB 12.212 billion, RMB 13.526 billion and RMB 13.808 billion respectively from 2021 to 2023. In addition, the company's current Pb (LF) is only 0.78 times, the safety margin is sufficient and there is a definite dividend income bottom, maintaining the "overweight" rating.
Risk tip: coal demand has dropped sharply; The mass transit railway is difficult to sustain; Volume diversion on competitive lines.
