Shandong Hi-Speed Road&Bridge Co.Ltd(000498) (000498)
The company’s main business is strong, and its performance in 21h1 is much higher than expected: the company’s main business is highway, bridge engineering, tunnel engineering, municipal engineering, construction engineering, transportation engineering, port and waterway engineering, railway engineering, urban rail transit engineering construction, etc. its comprehensive competitive strength ranks in the forefront among foreign contracted projects and provincial road and bridge construction enterprises, The competitive strength and market position have been continuously enhanced. In June 2020, the Department of housing and urban rural development of Shandong Province issued the circular on announcing the top 10 counties and top 30 enterprises in the province’s top 5 cities in the construction industry in 2019. The company’s subsidiary road and Bridge Group ranked seventh among the top 30 enterprises with comprehensive strength in the construction industry of Shandong Province. The list of China’s top 100 foreign contracting completed in 2020 was released, and the company ranked 49th with a foreign contracting completed amount of US $569 million. On July 14, the company released the performance express for the first half of 2021, realizing an operating revenue of 22.259 billion yuan, an increase of 90.12% over the same period of last year; The net profit attributable to the parent company was 780 million yuan, an increase of 68.93% over the same period of last year; The net profit deducted from non parent company was 746 million yuan, an increase of 103.64% over the same period of last year, which greatly exceeded the market expectation.
With the strong support of national policies, it has a stable and broad market outside China: transportation is a basic, leading and strategic industry and an important service industry in the national economy, and an important support for promoting sustainable development. The new development pattern with China’s large cycle as the main body and China’s international double cycle promoting each other has brought major opportunities to the infrastructure construction industry. Under the counter cycle, the state proposes to speed up the construction of new infrastructure, new urbanization, transportation, water conservancy and other major projects. It is expected that by the end of the 14th five year plan, a number of new and old infrastructure projects such as expressway, railway, rail transit, urban agglomeration construction, environmental protection infrastructure and the construction of a new generation of industrial parks will be gradually implemented, which will bring new market opportunities. In the coming period, the new infrastructure led by digitization will be integrated with the traditional infrastructure, and the new urbanization with people as the core will become the development trend of the industry. In Shandong Province, according to the public data of Shandong Provincial Department of transportation, at the end of the 13th five year plan, the province’s highway traffic mileage reached 286800 kilometers, and the highway density reached 183 kilometers per 100 square kilometers, of which the highway traffic mileage reached 7473 kilometers, ranking fifth in China; The operating mileage of high-speed rail has reached 2110 kilometers, ranking third in China; The mileage of urban rail transit has reached 339.1 km; Ordinary national and provincial roads cover more than 90% of villages and towns and important scenic spots in the province; Nearly 70000 kilometers of rural roads were reconstructed and upgraded in five years, Administrative village asphalt The (cement) road rate and passenger train rate have reached 100%. Facing the market demand, the company seizes the opportunity and adopts the regional operation and development strategy to continuously consolidate the original market and open up new markets in China; it continues to explore the international markets such as Algeria, Angola, Vietnam, Bangladesh, Malawi, Ethiopia, South Sudan, Kazakhstan and Serbia abroad to speed up the development The pace of “going out”. By the end of 2020, the company had 184 projects under construction and 303 completed projects. Many key projects such as Jitai and Zaohe had been completed and opened to traffic as scheduled. Ning Liang expressway was successfully opened to traffic at the end of October, one month ahead of the scheduled construction period. Beijing Shanghai reconstruction and expansion, LAN Luo, Weifang connecting line and Weilai high-speed railway were also opened to traffic at the end of November.
Continue to increase R & D investment in new technologies, new products and new processes: in 2020, the R & D investment was 750 million yuan, a year-on-year increase of 123.59%. In the past 20 years, the company completed 16 scientific and technological achievements evaluation, added 1 national enterprise technology center, 2 provincial enterprise technology centers, 2 provincial transportation industry R & D centers and 2 provincial postdoctoral innovation practice bases, and won many awards such as the first prize of science and technology in Shandong Province.
Diversified operation brings about sustainable development: the company always adheres to diversified operation and focuses on expanding the field of large transportation and large infrastructure projects. In 2020, the bid winning amount will reach 70.146 billion yuan, an increase of 128.92% over the previous year. In the new business field, the company acquired China Railway Long company to make up for the lack of qualifications, talents and technology such as rail transit and ecological restoration. In the upstream and downstream of the industrial chain, the company acquired green construction development, improved the construction steel structure industrial chain, and laid a foundation for expanding the field of prefabricated construction. At the same time, the company actively explored the regional market, acquired Tongtong road and bridge, Shuntong road and bridge, Binzhou jiaofa and Ningxia highway, and continuously optimized the regional layout; Set up regional companies in Yunnan, Sichuan and Hubei, focusing on the development of relevant regional markets. One belt, one road initiative was also brought to the company. We actively expanded overseas markets, developed foreign traditional markets independently, and developed overseas emerging markets by way of partnership, and successfully acquired China Shandong international economic and Technological Cooperation Co., Ltd. and Shandong Hi-Speed Company Limited(600350) Nile Investment Development Co., Ltd.
The specially proposed business plan for 2021 shows business confidence: Based on the financial statement report of 2020 and with reference to the company’s operating performance and current operating capacity in recent years, the company is expected to achieve an operating revenue of 52.113 billion yuan and a net profit of 2.087 billion yuan in 2021, which is significantly higher than that in 2020. The proposal of this plan shows strong business confidence.
Profit forecast and investment suggestion: according to wind’s consistent expectation, the company’s operating revenue from 2021 to 2023 is expected to be RMB 51.244 billion, RMB 64.824 billion and RMB 78.264 billion respectively, with a year-on-year increase of 48.80%, 26.50% and 20.73% respectively; The net profit attributable to the parent company was 1.817 billion yuan, 2.160 billion yuan and 2.774 billion yuan respectively, with a year-on-year increase of 35.78%, 18.82% and 28.42%; EPS is 1.17 yuan, 1.39 yuan and 1.78 yuan respectively, corresponding to 5.05 times, 4.25 times and 3.31 times of the current share price PE, which is rated as “recommended”.
Risk tip: the business development is less than expected, the macro capital is tight, and the growth rate of infrastructure investment is declining.
