\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 039 Sichuan Road & Bridge Co.Ltd(600039) )
Events
The company released its 2021 annual report on the evening of March 29: during the reporting period, the company achieved a revenue of RMB 85.049 billion, a year-on-year increase of 31.73%, an attributable net profit of RMB 5.582 billion, a year-on-year increase of 85.43%, and an attributable net profit of RMB 5.474 billion after deduction, a year-on-year increase of 86.10%. At the same time, a cash dividend of 4.7 yuan will be distributed for every 10 shares. In this regard, our comments are as follows:
Key investment points
The performance exceeded expectations and the profitability increased significantly
In 2021, the company’s performance exceeded the previous performance forecast (revenue of 84.516 billion yuan, attributable net profit of 5.41 billion yuan and attributable net profit of 5.23 billion yuan after deduction). The performance growth was mainly due to the multi-point flowering of the company’s business. In terms of business, engineering construction / PPP and BOT operation / land leveling / trade sales achieved revenue of 69.469/23.33/8.48/11.897 billion yuan respectively, with a year-on-year increase of 33.51% / 31.8% / 68.11% / 19.22% respectively. Due to the company’s improvement of market development ability, the number of high-quality construction projects has increased, the project management level has been continuously improved, and the cost reduction and efficiency increase measures have been actively taken, which has greatly improved the profitability. The company’s comprehensive gross profit margin is 16.14%, an increase of 1.34pct year-on-year. The company’s sales / management / Finance / R & D expense ratio was 0.03% / 1.30% / 2.80% respectively, with a year-on-year decrease of 0 / 0.44/1/pct and a year-on-year increase of 0.60pct, mainly due to the increase of R & D investment in green and low-carbon intelligent construction and digital transformation and upgrading. The net cash flow from the company’s operating activities was – 1.023 billion yuan, mainly due to the investment in Meishan Tianhuan, yanpingba and other PPP projects.
Infrastructure benefited from the acceleration of infrastructure construction in Chengdu Chongqing urban agglomeration and the increase in the market share of controlling shareholders, and sufficient orders were placed on hand to lay the foundation for performance growth
In February 2021, the CPC Central Committee and the State Council issued the national comprehensive three-dimensional transportation network planning outline, which for the first time listed Chengdu Chongqing region as the “four poles” of the national transportation network together with Beijing Tianjin Hebei, the Yangtze River Delta and the Great Bay area of Guangdong, Hong Kong and Macao, and its status has been significantly improved. In October 2021, the Sichuan provincial government issued the comprehensive transportation development plan of Sichuan Province during the 14th Five Year Plan period, proposing that the investment in comprehensive transportation construction during the 14th Five Year Plan period will be more than 1.2 trillion yuan, including 700 billion yuan for roads and waterways, 300 billion yuan for railways, 25 billion yuan for civil aviation and 220 billion yuan for rail transportation. With the support of the central and local governments, the investment in transportation infrastructure of Chengdu Chongqing urban agglomeration is expected to accelerate. In the first half of 2021, Sichuan railway investment, the former controlling shareholder of the company, and Sichuan communications investment strategic reorganization, newly established and merged to establish Shudao investment group, which has become the largest transportation infrastructure investment group in Sichuan. The proportion of opened expressways in Sichuan provinces and cities is as high as 80% (Sichuan railway investment accounts for about 19% and Sichuan communications investment accounts for 61%). As the core infrastructure construction platform of the group, the company has obvious advantages in obtaining orders. The company will fully benefit from the acceleration of infrastructure investment in Chengdu Chongqing urban agglomeration and the increase of market share caused by the change of controlling shareholders. In 2021, the company added 100174 billion yuan of orders, a record high. At the end of the period, the orders on hand were 137258 billion yuan, 1.61 times the company’s revenue in 2021. Sufficient orders on hand laid the foundation for the growth of the company’s performance.
New energy has made steady progress and created new performance growth points
New energy is one of the strategic development directions of the company during the 14th Five Year Plan period. It is mainly to increase the investment in clean energy such as hydropower, photovoltaic and wind energy, carry out the application of energy storage projects, and build the lithium battery industry chain of “resource regeneration precursor cathode material”. At present, the new energy business is advancing steadily: 1) cathode material: Sichuan new lithium wants to have an annual output of 50000 tons, and 10000 tons of ternary cathode material phase I has been put into operation, The preliminary preparations for the precursor project with an annual output of 20000 tons have been completed; 2) Phosphate rock: it is planned to invest 100 million yuan to participate in the bankruptcy and reorganization of Jinchuan company, a phosphorus chemical enterprise, and establish a joint venture with Sichuan New Energy Power Company Limited(000155) , Byd Company Limited(002594) , Hefeng company ( Sichuan Road & Bridge Co.Ltd(600039) holding 65%) to comprehensively develop the phosphate rock resources and lithium iron phosphate project in Mabian County; 3) Lithium mine: it is proposed to transfer 5% equity of energy investment lithium industry held by Sichuan New Energy Power Company Limited(000155) in cash. At the same time, Sichuan is rich in lithium resources. As an enterprise of Sichuan SASAC, the company has certain advantages in acquiring lithium resources; 4) It is proposed to introduce energy investment group and Byd Company Limited(002594) as strategic investors. The continuous improvement of the industrial chain of new energy business will become a new performance growth point of the company.
Profit forecast
According to the company’s annual report and orders in hand, we raised the company’s profit forecast, ignoring the impact of acquisition and additional issuance of supporting funds. It is predicted that the company’s net profit attributable to the parent company in 20222024 will be 7.260, 8.566 and 9.855 billion yuan respectively, EPS will be 1.52, 1.79 and 2.06 yuan respectively, and the current share price corresponding to PE will be 7, 6 and 5.2 times respectively. We are optimistic about the stable growth of the company’s infrastructure business and the accelerated implementation of new energy transformation, Maintain the company’s “recommended” investment rating.
Risk tips
Macroeconomic downside risk, the risk that the support of controlling shareholders is lower than expected, the risk that new orders and implementation are lower than expected, the risk that the progress of new energy business is slow, the risk that the promotion of lithium phosphate rock is lower than expected, the risk that the introduction of war investment and synergy are lower than expected, the risk that the acquisition and additional issuance of supporting funds cannot be completed smoothly, etc.
