\u3000\u3 Ping An Bank Co.Ltd(000001) 965 China Merchants Expressway Network Technology Holdings Co.Ltd(001965) )
News / Announcements
China Merchants Expressway Network Technology Holdings Co.Ltd(001965) released the 2021 annual report. The net profit attributable to the parent company in the whole year was 4.973 billion yuan, a year-on-year increase of 124%, an increase of 15% over 2019. Both endogenous and extension of the main industry of road products and diversified expansion related to the road industry chain are optimistic about the offensive and defensive characteristics of the company’s excess multi-dimensional growth superimposed with high dividend undervalued value.
Key investment points
The net profit attributable to the parent company in 21 years fell in the forecast center and recovered smoothly as a whole
In 2021, the national transportation economy was repaired smoothly, and the net profit attributable to the parent company was 4.973 billion yuan, with a year-on-year increase of 124% and 15% compared with 2019; The net profit attributable to the parent company in the fourth quarter was 951 million yuan, down 2.6% year-on-year and 5.4% compared with 19q4. Considering the impact of emergencies such as the flood in North China in the third and fourth quarters of 2021 and local sporadic epidemics across the country on the traffic flow, the performance recovery is basically in line with expectations.
The recovery and superposition of traffic flow and the improvement of road property layout have boosted the main business of highway investment and operation
The recovery of traffic flow in the consolidated road section brought about the growth of main business income. By the end of 2021, the total mileage of the company’s highway investment and operation has reached 12700 kilometers, ranking first in the operating highway industry, with an equity mileage of 3362 kilometers. In 2021, the company’s investment and operation business revenue was 5.823 billion yuan, a steady increase of 6.7% over 2019; Among them, the toll revenue was 5.390 billion yuan, a steady increase of 6.0% over 2019. We estimate that the net profit of consolidated statement business (excluding investment income) of investment and operation segments is 2.5 billion yuan, an increase of 13.1% over 2019.
The performance of listed and unlisted road and bridge enterprises also recovered. The company has participated in several high-quality toll road companies, among which the number of A-share and H-share highway listed companies has increased from 12 to 15. It has strategically taken shares in Shanxi Road&Bridge Co.Ltd(000755) , Qilu expressway, and the secondary market has purchased shares in Shanghai, Hangzhou and Ningbo and increased its holdings of Shenzhen Expressway Company Limited(600548) shares, adding 45% of the shares of Zha Jiaxing Suzhou Expressway and 50% of the shares of Kunyu expressway during the year, driving the company to realize an investment income of 3.949 billion yuan in 2021, an increase of 14.7% over 2019.
Relying on the platform to take the lead in layout, we are optimistic about the first mover advantage of intelligent transportation and transportation technology
During the “14th five year plan” period, the construction of digital intelligence of transportation in China is imperative. While optimizing traditional industries, the company actively layout new business forms, taking the lead in the layout of smart transportation (10.4% of revenue in 2021) and transportation technology (19.4% of revenue in 2021), with obvious first mover advantages. Relying on the strength of shareholders and investment advantages, the company continues to be optimistic about the company’s subsequent promotion of the downward and outward export of related businesses.
The total amount of cash dividends reached a new high, and there is still room for industry policy catalysis
The total amount of cash dividends reached a record high. In 2021, the company plans to increase the total cash dividend to 2.138 billion yuan, an increase of 1.044 billion yuan year-on-year, a new high since listing, and there may be room for further improvement in the follow-up. The company’s performance has excess growth, superimposed with stable dividends to support the absolute return, bringing allocation value.
The policy side pays attention to the revision and promotion of highway related laws. In November 2021, the Ministry of transport issued the legislative plan for the 14th five year plan of transportation, requiring the highway law (Revised) to adjust and redefine the basic systems of toll road financing, construction, maintenance, operation and management, so as to realize the healthy and sustainable development of toll roads; The regulations on the administration of toll roads (Revised) are required to clarify the principles for determining the debt repayment period and operation period of toll roads, so as to prevent the risk of government debt. We judge that the new “highway law” and “charging regulations” on the policy side of the industry are expected to be promoted, or the charging period of toll roads will be extended, which will further enhance the value of the company from the perspective of DCF.
Profit forecast and valuation
The main business of the company’s road production also has endogenous and epitaxial growth. In addition, the expansion of the industrial chain has relatively broad expansion space and output advantages. Compared with the current Pb (LF) is only 0.95 times. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 5.670 billion yuan, 6.316 billion yuan and 6.973 billion yuan respectively, corresponding to the current PE share price of 8.7 times, 7.8 times and 7.0 times respectively, maintaining the “buy” rating.
Risk warning: industrial policies are developing in an unfavorable direction; The growth of traffic flow is less than expected; The extension expansion was less than expected.
