\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 390 China Railway Group Limited(601390) )
Matters: the company issued its 2021 annual report. In 2021, it realized a total operating revenue of 1073272 billion yuan, an increase of 10.11% over the same period of last year; The net profit attributable to shareholders of listed companies was 27.618 billion yuan, an increase of 9.65% over the same period of last year, and an increase of 19.35% year-on-year after deducting non profits. Realize basic eps1 04 yuan. It is proposed to distribute a cash dividend of 1.96 yuan (including tax) for every 10 shares.
The growth rate of revenue increased steadily, and the net profit deducted from non parent company increased by 19.35%. The company achieved a year-on-year growth rate of 10.11% in 2021, which was lower than the growth rate (+ 14.56%) in 2020, and generally maintained a steady growth level. Quarterly, the company achieved a year-on-year growth rate of 50.94%, 0.74%, – 0.17% and 5.97% in total revenue from 2021q1 to Q4 respectively. From the perspective of business structure, the main businesses of the company achieved revenue and growth respectively: infrastructure construction of 923436 billion yuan (year-on-year + 9.4%), survey and design of 17.604 billion yuan (year-on-year + 8.75%), engineering equipment and parts manufacturing of 23.831 billion yuan (year-on-year + 3.28%), real estate of 50.249 billion yuan (year-on-year + 1.92%), other main businesses of 58.153 billion yuan (year-on-year + 38.22%), accounting for 86.27%, which is the main source of income. From the perspective of market structure, the revenue of domestic business reached 1018484 billion yuan (year-on-year + 9.79%), accounting for 94.90% (year-on-year -0.27 PCT); Overseas business achieved a revenue of 54.787 billion yuan (year-on-year + 16.36%), accounting for 5.10% (year-on-year + 0.27 PCT). Both domestic and foreign business income increased, with a greater margin abroad. In terms of net profit growth, the growth rate of net profit attributable to the parent company during the period was 9.65%, which was higher than the growth rate (+ 6.38%) in 2020, and the net profit deducted from non attributable to the parent company increased by 19.35% year-on-year, the highest level in history. In a single quarter, from 2021q1 to Q4, the net profit attributable to shareholders of listed companies increased by 80.89%, – 18.51%, 15.04% and 0.62% year-on-year respectively.
The gross profit margin was the highest level in recent five years, the cost rate was effectively controlled during the period, and the net profit margin increased: in terms of gross profit margin, the company’s comprehensive gross profit margin during the reporting period was 10.00%, an increase of 0.05 PCT compared with 2020, the highest level in recent five years. In terms of business, the gross profit margin of each main business is: infrastructure construction 8.41% (year-on-year + 0.09 PCT), survey and design 28.31% (year-on-year -3.36 PCT), engineering equipment and parts manufacturing 21.61% (year-on-year + 2.82 PCT), real estate 22.19% (year-on-year -1.01 PCT), and other main businesses 18.31% (year-on-year -0.42 PCT). Among them, the gross profit margin of engineering equipment increased year-on-year, mainly due to the increase in the sales unit price of steel structure products and the effective cost control of construction equipment; The gross profit margin of survey and design decreased year-on-year, mainly due to the high design difficulty and high cost investment of projects with large income contribution in this period. By market, the gross profit margin of Chinese business is 10.33% (+ 0.03 PCT) and that of overseas business is 8.02% (+ 0.65 PCT). In terms of period expenses, the company’s period expense ratio in 2021 was 5.49% (year-on-year -0.12 PCT), including 0.55% (year-on-year + 0.03 PCT), 2.26% (year-on-year -0.06 PCT), 2.31% (year-on-year + 0.07 PCT) and 0.35% (year-on-year -0.17 PCT). The sales expenses and R & D expenses increased by 22.46% and + 13.36% respectively year-on-year. The increase in sales expenses was mainly due to the increase in marketing investment during the period; The increase in R & D expenses is mainly due to the increase in R & D efforts during the period. In terms of asset impairment, the company’s asset and credit impairment losses during the period totaled 7.97 billion yuan, a decrease of 84 million yuan compared with 2020. In terms of net interest rate and roe, the net profit margin of sales during the period was 2.85%, an increase of 0.04 PCT compared with 2020; Roe (weighted) was 11.63%, a decrease of 0.22 PCT compared with 2020, or mainly due to the decline of the company’s leverage level.
The operating cash flow performed well, and the debt ratio fell to the lowest level in recent ten years: in terms of cash flow and monetary capital, the company’s operating net cash flow during the reporting period was 13.069 billion yuan, a year-on-year decrease of 17.925 billion yuan compared with the net inflow in 2020, mainly due to the company’s increased investment in infrastructure investment projects and the increase of land reserves in real estate business. The investment net cash flow was -77.458 billion yuan, an increase of 14.316 billion yuan compared with the net outflow in 2020, mainly due to the increase in investment in infrastructure investment projects. The net cash flow from financing was 67.365 billion yuan, an increase of 27.163 billion yuan (+ 67.56%) over the net inflow in 2020, mainly due to the increase in the scale of external loans and the investment of minority shareholders. According to the annual report, the year-on-year growth rates of the company’s short-term loans / other current liabilities / long-term loans during the period were 0.27% / 10.39% / 34.68% respectively. At the end of the reporting period, the company’s monetary capital balance was 178913 billion yuan, with a year-on-year increase of about 4.145 billion yuan, mainly due to the increase of financing cash inflow. In terms of capital structure, the company’s asset liability ratio at the end of the period was 73.68%, a decrease of 0.22 PCT compared with the end of 2020, the lowest debt ratio of the company in recent ten years. In terms of accounts receivable and notes receivable, the notes receivable and accounts receivable of the company at the end of the period were 127.07 billion yuan, an increase of 12.04% year-on-year compared with the end of 2020, or the accounts receivable increased due to the expansion of the company’s business scale during the period.
The amount of newly signed contracts rose steadily and is expected to benefit from the increase in infrastructure growth: the company’s total newly signed contracts in 2021 amounted to 272932 billion yuan, an increase of 4.7% over 2020. By business, the capital construction business newly signed 241668 billion yuan (year-on-year + 10.7%), of which: 1) the railway newly signed 433.57 billion yuan (year-on-year + 22.0%); 2) 295.26 billion yuan (year-on-year – 27.9%) was newly signed for highways; 3) The newly signed municipal and other categories amounted to 168785 billion yuan (year-on-year + 19.0%). The newly signed survey and design business was 20.55 billion yuan (year-on-year – 20.5%); Industrial equipment and parts manufacturing business newly signed 61.28 billion yuan (year-on-year + 12.9%); The newly signed (contract sales) of real estate development business was 58.03 billion yuan (year-on-year – 15.4%). On the basis of maintaining the leading position of traditional infrastructure, the company continued to explore new fields such as water conservancy and hydropower, clean energy, port and waterway, offshore wind power, pumped storage and water transfer projects, and achieved certain results. In 2021, the company contracted about 44 billion yuan for 5g projects, wind power and photovoltaic projects and ecological governance projects. The new orders in port, waterway and airport engineering markets increased by 76.9% and 54.6% respectively year-on-year. From the perspective of regional structure, the newly signed contracts of domestic business reached 257761 billion yuan, a year-on-year increase of 4.4%, accounting for 94.44%; Overseas business achieved 151.71 billion yuan of newly signed contracts, an increase of 11.3% year-on-year, accounting for 5.56%. In terms of outstanding contracts, as of the end of the reporting period, the outstanding contract amount of infrastructure construction business was 4211.2 billion yuan, a year-on-year increase of 20.53%; The outstanding contract amount of survey and design business was 49.8 billion yuan, a year-on-year decrease of 10.9%; The outstanding contract amount of engineering equipment and parts manufacturing business was 97.61 billion yuan, a year-on-year increase of 36.8%. At present, infrastructure plays a prominent role in underpinning the bottom, with clear signals of steady growth and broad market space. A number of infrastructure overweight policies have been issued one after another. As one of China’s two major railway and urban rail construction giants, the company may benefit from the increase in the growth rate of infrastructure investment in the future.
Investment suggestion: we predict that the revenue growth rate of the company from 2022 to 2024 will be 10.5%, 10.0% and 9.0% respectively, the net profit growth rate will be 11.0%, 10.8% and 10.5% respectively, and the EPS will be 1.24, 1.37 and 1.52 yuan respectively. Maintain the company’s Buy-A investment rating.
Risk warning: the epidemic control is not as expected; The macro-economy fluctuates greatly, the industry competition intensifies, the project progress is less than expected, and the project payment collection risk.
