Shandong Hi-Speed Road&Bridge Co.Ltd(000498) ( Shandong Hi-Speed Road&Bridge Co.Ltd(000498) ) Shandong Province is the leader of transportation infrastructure, with leapfrog and high-quality growth. The company is a leading state-owned road and bridge construction enterprise in Shandong Province. Backed by the largest shareholder Shandong Hi-Speed Company Limited(600350) group, the company has great competitive advantages in the provincial road and bridge and other transportation infrastructure markets. In 2021, the company won 101.04 billion yuan of orders, an increase of 44% at the same time; The performance forecast disclosed that the revenue / performance in 2021 increased by 66% / 58% respectively, and the CAGR in the five years from 16 to 21 was 48% / 37% respectively, realizing leapfrog and high-quality growth.
During the 14th Five Year Plan period, the transportation infrastructure of Shandong Province is expected to continue high growth, with steady growth this year. According to the comprehensive transportation development plan of Shandong Province in the 14th Five Year Plan period, Shandong Province will accelerate the construction of a strong transportation Province during the 14th Five Year Plan period. It is planned to add 2527 kilometers of expressways and 2290 kilometers of high-speed railways, with an increase of 19% / 68% respectively compared with the actual new mileage in the 13th Five Year Plan period. The investment in transportation construction in Shandong Province is expected to continue to grow rapidly. On January 23, Shandong Province issued the government work report for 2022, proposing that "unswervingly strive to ensure steady economic growth" be listed as the top ten key tasks of this year. The investment in transportation construction in the province in 2022 is expected to exceed 270 billion yuan, an increase of 12% over last year. The steady growth of transportation infrastructure is expected to increase.
Provincial infrastructure listed companies are expected to play an important role in financing in the future, continue to do large-scale, meet the needs of local governments, and the company is expected to obtain more resource support. After 2017, the central government continued to tighten the supervision of implicit liabilities of local governments, and the financing of urban investment platforms was strictly limited. However, some provinces still have a large demand for infrastructure investment in the future, so it is urgent to expand new financing channels. For local governments, the use of equity financing of listed infrastructure companies not only complements some infrastructure funds, but also does not significantly increase hidden liabilities and leverage. Therefore, continue to expand the scale of local state-owned infrastructure listed companies and enhance their financing capacity in the capital market, which is in line with the development needs of local governments in the future. Shandong Province has large space for infrastructure investment, strong financial strength, sufficient resources and strong capital demand Shandong Hi-Speed Road&Bridge Co.Ltd(000498) by the end of 2021, a total of 42.7 billion yuan was invested in the construction of integrated highway projects in the province, which is expected to gradually play a more important role in financing and construction in the future. It is expected that with the strong support of various resources in the province, the company's revenue and performance are expected to continue high growth.
After the reorganization of major shareholders, it helped the company improve the market share of business in the province, and opened up new space for diversified territory such as railway and municipal administration. In 2020, Shandong Hi-Speed Company Limited(600350) group and Qilu transportation group merged to form a new Shandong Hi-Speed Company Limited(600350) group. The proportion of expressway investment and construction in the province increased from 39% to 94%. In the future, Shandong Hi-Speed Road&Bridge Co.Ltd(000498) the share of expressway construction in the province is expected to further increase. According to the plan, the total investment of expressways within the group is expected to be about 520 billion yuan during the 14th Five Year Plan period. It is estimated that 320 billion orders can be obtained according to the Shandong Hi-Speed Road&Bridge Co.Ltd(000498) historical average bid winning rate. In addition to expressways, the company actively arranges the railway and rail transit markets, improves the transportation infrastructure construction system, and develops comprehensive business in areas, which is expected to open up new growth space outside roads and bridges.
Investment suggestion: we expect the net profit attributable to the parent company from 2021 to 2023 to be 2.1/27/3 billion yuan respectively, with a year-on-year increase of 58% / 28% / 27%, EPS of 1.36/1.75/2.22 yuan respectively, and the corresponding PE of the current stock price is 5.9/4.6/3.6 times respectively. The average PE of comparable companies in 22 years is 6.2 times. Considering the company's good growth and low valuation in the future, it is rated as "buy".
Risk tip: the investment in transportation infrastructure in Shandong province does not meet the expectations, the risk of decline in gross profit margin, the risk of project construction progress does not meet the expectations, and the support of major shareholders does not meet the expectations.
