\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 800 China Communications Construction Company Limited(601800) )
Event:
The company issued the annual report of 2021. During the reporting period, the company achieved an operating revenue of 685.6 billion yuan, an increase of 9% at the same time; The net profit attributable to the parent company was 18 billion yuan, an increase of 11% at the same time; The net profit attributable to the parent company after deducting non profits was 14.6 billion yuan, an increase of 6% at the same time. In the fourth quarter alone, the company achieved an operating revenue of 169.4 billion yuan, a decrease of 22% over the same period; The net profit attributable to the parent company was 3 billion yuan, a decrease of 51%. Dividend: the proposed dividend per share is 0.204 yuan (including tax), accounting for 20% of the net profit attributable to the common shareholders of the listed company in the current year.
Comments:
The newly signed orders and revenue maintained a stable growth rate, and the cost factor reduced the gross profit margin:
In 2021, the company signed 1267.9 billion yuan of new orders, an increase of 19% at the same time, and achieved 108% of the annual target (the target is a year-on-year increase of 10%). Among them, infrastructure construction business, infrastructure design business, dredging business and other businesses signed new contracts of 1125.4 billion yuan, 44.5 billion yuan, 87.3 billion yuan and 10.7 billion yuan respectively, with a year-on-year increase of 18%, – 7%, 48% and 15%. Port construction, road and bridge construction, railway construction, urban construction (municipal and environmental protection, etc.) and overseas projects signed 48.1 billion yuan, 310.9 billion yuan, 25 billion yuan, 532 billion yuan and 209.4 billion yuan respectively, with an increase of 27%, 12%, 62%, 27% and 4% respectively. The newly signed contracts from overseas regions amounted to 216 billion yuan, an increase of 5% at the same time, accounting for about 17% of the newly signed contracts of the company. The increase of newly signed contract amount mainly comes from the increase of investment and construction demand in urban comprehensive development, municipal engineering, housing construction, roads and bridges, rail transit and other project fields. By the end of 2021, the company was executing about 3128.3 billion yuan of outstanding contracts, an increase of 7.5% at the same time. The growth rate of newly signed orders remained stable, and railway construction continued to maintain rapid growth; The outstanding contract amount is about 4.6 times of the revenue, providing a strong guarantee for the steady growth of subsequent revenue.
In 2021, the company achieved an operating revenue of 685.6 billion yuan, an increase of 9% at the same time, and the revenue growth rate remained stable. Among them, the operating revenue of infrastructure construction, infrastructure design and dredging was 607.4 billion yuan, 47.6 billion yuan and 42.9 billion yuan respectively, with an increase of 8%, 19% and 12% respectively. During the reporting period, the company’s comprehensive gross profit margin was 13%, with an increase of -0.5pct; Among them, the gross profit margin of infrastructure construction, infrastructure design and dredging increased by -0.5pct, – 0.17pct and -1.7pcts respectively. The increase of capital construction business income and the decrease of gross profit margin are mainly due to the increase of income contribution of housing construction projects and the relatively low profitability (due to the rise of raw material prices); The increase of revenue from infrastructure design business and the decrease of gross profit margin are mainly due to the further increase of revenue contribution of large-scale comprehensive projects and the low profitability; The increase of dredging business income and the decrease of gross profit margin are mainly due to the business transformation, the increase of business income contribution of low gross profit margin level and the low profit level (caused by the rise of raw material price).
The net outflow of operating and investment cash decreased, and the marginal improvement of cash flow position:
In 2021, the net operating cash flow of the company was – 12.6 billion yuan, a decrease of 59% over the same period of the previous year (assuming that the changed accounting policy was implemented on January 1, 2020, the net cash flow from operating activities in the same period of the previous year was – 31.1 billion yuan). The improvement of operating cash flow was mainly due to the accelerated turnover of accounts receivable and the reduction of funds occupied by inventories. In 2021, the company’s net investment cash flow was – 52.8 billion yuan, a decrease of 13% over the same period of the previous year (assuming that the changed accounting policy was implemented on January 1, 2020, the net cash flow from investment activities in the same period of the previous year was – 60.8 billion yuan), which was mainly due to the increase in cash received from the disposal of financial assets, subsidiaries and joint ventures. The net cash flow from financing activities was 42.2 billion yuan, a decrease of 51.5 billion yuan over the same period of last year, mainly due to the optimization of infrastructure investment business structure, the accelerated turnover of accounts receivable and the reduction of new capital demand in the reporting period.
The management and financial expense ratio decreased slightly, and the profit margin increased:
During the reporting period, the company’s expense ratio was 7.24%, a slight decrease of 0.64pct compared with the same period of the previous year. Among them, the sales expense rate was 0.21%, with an increase of 0.02pct; The management expense rate was 2.84%, with an increase of -0.33pct. The decrease in the sales expense rate was mainly due to the proper cost control of the company; The R & D expense rate was 3.29%, with an increase of 0.09pct, mainly due to the increase of R & D project approval expenditure for new projects; The financial expense rate was 0.90%, with an increase of -0.42pct, mainly due to the increase in interest income of investment projects.
The revaluation of the company’s assets is expected to bring greater profit and operation value:
By the end of 2021, the company had invested 223.6 billion yuan in franchise projects, accounting for 16% of total assets; Among them, there are 27 projects in the operation period (another 19 joint-stock projects). The cumulative investment scale of the projects in the operation period reaches 185.2 billion yuan, accounting for 13% of the total assets; The operating income was 7.8 billion yuan, with a net loss of 1.7 billion yuan, a loss of 2.6 billion yuan less than the same period last year, and the margin of profitability of operating assets was better.
At present, the REIT of Huaxia China Communications Construction Company Limited(601800) expressway is about to be listed, the selling price of fund units is 9.399 yuan / share, and its book net assets realize a premium rate of 75%. The company’s existing highway assets are huge, which will fully benefit from the historic opportunity of REITs and is expected to usher in value revaluation. At the same time, REITs can make the company’s roe and free cash flow improve marginally, and can also provide equity funds for the company to accelerate its expansion.
Maintain the “buy” rating of A-Shares and H shares of the company:
China Communications Construction Company Limited(601800) new orders and revenue increased steadily, and the rise in raw material prices slightly reduced the gross profit margin. In 2021, the company’s net operating cash outflow decreased significantly, and the overall marginal of cash flow improved; The rate of management and financial expenses decreased slightly, and the profit space increased. The company’s operating assets are large and account for a relatively high proportion. At the same time, the operating projects are gradually entering a mature period and the profitability is improved. It will fully benefit from the historic opportunity of REITs and is expected to usher in value revaluation. Affected by the repeated covid-19 epidemic, we lowered the forecast of the company’s net profit attributable to the parent company for 22 / 23 years. It is estimated that the company’s EPS from 2022 to 2024 will be 1.24 yuan (16% lower than the previous value), 1.36 yuan (19% lower than the previous value) and 1.54 yuan respectively. The current price corresponds to the dynamic P / E ratio of a / H shares in 2022, which is 7.6x/2.7x respectively. The valuation is still low, maintaining the “buy” rating of A-Shares and H shares.
Risk tip: infrastructure investment is less than expected, the growth rate of newly signed orders slows down, the collection of orders is less than expected, and the number of operating assets listed in REITs market is less than expected.
