\u3000\u3 Guocheng Mining Co.Ltd(000688) 015 Traffic Control Technology Co.Ltd(688015) )
Key investment points
Event: the company released the annual report of 2021. In 2021, the operating revenue was 2.582 billion yuan, a year-on-year increase of 27.44%, the net profit attributable to the parent was 291 million yuan, a year-on-year increase of 22.89%, and the net profit deducted from the non attributable parent was 2.646 billion yuan, a year-on-year increase of 29.31%; Slightly lower than expected.
In 2021, the performance maintained a rapid growth trend and the gross profit margin increased significantly.
(1) growth analysis: in 2021, the company’s revenue increased by 27.44% year-on-year; The net profit attributable to the parent company increased by 22.89% year-on-year. The main reasons are: ① the company has sufficient orders on hand and the number of projects under implementation continues to increase; ② With the growth of the company’s business scale and the improvement of its technical level, the gross profit margin of the company’s products has gradually increased; ③ In order to expand the market scale and maintain the leading edge, the cost level of the company has been gradually increased.
(2) profitability analysis: the gross profit margin of sales in 2021 was 35.58%, with a year-on-year increase of 3.24pct, mainly due to the growth of business scale and the improvement of technical level, and the rapid growth of FAO system with high autonomy rate; The net profit margin of sales was 11.50%, a year-on-year decrease of 0.34pct; This is mainly because the company continues to increase market investment, implement equity incentive and increase management expenses, the corresponding rental fees of the company’s newly leased real estate have increased, and the amortization of unrecognized financing expenses under the new accounting standards has increased interest expenses; In the first half of 2021, the sales expense rate, management expense rate and financial expense rate were 2.79%, 10.45% and 0.05% respectively, with a year-on-year increase of 0.16pct, 0.90pct and 0.23pct respectively.
(3) analysis of operating capacity and operating cash flow: the company’s operating capacity was further improved. In 2021, the company’s accounts receivable turnover days were 135.24 days, a year-on-year decrease of 23.36 days. Since the 14th five year plan of 2021 is the investment period of the urban rail transit company, the project payment collection decreases and the operating cash flow decreases. In 2021, the net cash flow generated by the company’s operating activities is 190 million yuan, a year-on-year decrease of 45.31%.
The state attaches great importance to urban rail construction, and the new urban rail in the 14th five year plan has entered a new stage of high-level and stable development.
(1) the “suggestions on the 14th five year plan and the long-term goals for the year 2035” deliberated and adopted at the Fifth Plenary Session of the 19th CPC Central Committee clearly put forward “accelerating the construction of a powerful transportation country,… And accelerating the networking of rail transit in urban agglomerations and metropolitan areas”. The multi network integration development among different levels of rail transit in urban agglomerations represented by Beijing Tianjin Hebei, Yangtze River Delta, Guangdong Hong Kong Macao Bay area, Chengdu and Chongqing will enter a substantive stage.
(2) in terms of new lines, during the 14th Five Year Plan period, the construction of new lines of urban rail transit will enter a new stage of high-level and stable development. According to the approved planning and calculation, about 3000 kilometers of new lines will be built within five years, and the industry will maintain healthy and stable development. In terms of line reconstruction, it is estimated that by 2030, nearly 85 rail transit lines in China will enter the signal system reconstruction cycle, with a total length of about 2500 km.
(3) the national planning of several major metropolitan areas will greatly promote the construction of urban railways. The general office of the State Council forwarded the opinions on accelerating the development of urban (suburban) railways in metropolitan areas issued by the national development and Reform Commission and other departments, and clearly put forward that “urban (suburban) railways, trunk railways, intercity railways and urban rail transit form a transportation system with clear network level, reasonable functional positioning and efficient connection.” According to the recent construction plan approved by the state, it is expected that more than 2000 kilometers of municipal railways will be built by 2030, and the investment scale of national intercity and municipal railways will exceed trillion yuan.
The company is the leader and promoter of urban rail signal system and realizes the breakthrough in the international market.
(1) the company is the general contractor of the first independent FAO signal system in China; By the end of 2021, the company’s fully functional FAO line has reached 160 kilometers, ranking the leading level in the industry. The line operation is safe, efficient and stable, reflecting the company’s leading position in the field of FAO technology.
(2) in November 2021, the “Jiling Hedong” light rail in Hanoi, Vietnam, carrying the company’s interconnected CBTC system (i-cbtc) was officially delivered and put into operation. China’s China’s one belt, one road strategy will lead to the promotion of China standards, China’s equipment and China’s experience, and steadily expand the international market.
(3) the company adheres to the development concept of “scientific and technological innovation” and continues to cultivate the rail transit industry. In 2021, the company’s R & D investment was 272 million yuan, with a year-on-year increase of 56.84%, accounting for 10.52% of revenue, with a year-on-year increase of 1.97 PCT. The company has established a perfect internal control system of intellectual property rights to realize the protection of intellectual property rights; In 2021, the company applied for 381 patents and granted 133 patents. By the end of 2021, the company had 632 authorized patents, including 27 overseas patents; The company participated in the preparation of 9 relevant standards, including 4 leading standards and 5 participating standards, and issued 3 industry white papers.
(4) the company strives for progress while maintaining stability and continues to promote market development. In 2021, the company won the bid for 2 new lines, 2 reconstructed lines and 2 extended lines; The bid winning amount of signal system project increased by 1.803 billion yuan, and the total amount of contract signing increased by 1.871 billion yuan throughout the year; The new contract amount related to maintenance business is 154 million yuan; The newly signed contract amount of TIDs project is 161 million yuan.
Maintain the “overweight” rating. Considering the impact of amortization of equity incentive expenses, we lowered the company’s profit forecast. It is estimated that the company’s revenue in 20222024 will be 3.094 billion yuan, 3.766 billion yuan and 4.482 billion yuan respectively (the predicted value in 20222023 before adjustment is 3.301 billion yuan and 3.875 billion yuan respectively); Year on year growth of 19.83%, 21.72% and 18.99% respectively; The net profit attributable to the parent company was 361 million yuan, 452 million yuan and 541 million yuan respectively (the predicted value from 2022 to 2023 before adjustment was 388 million yuan and 457 million yuan respectively), with a year-on-year increase of 24.22%, 25.09% and 19.73% respectively; EPS is 1.93 yuan, 2.42 yuan and 2.89 yuan respectively (the predicted values from 2022 to 2023 before adjustment are 2.42 yuan and 2.85 yuan respectively); According to the share price on April 7, 2022, the corresponding PE is 13.6, 10.9 and 9.1 times respectively. Benefiting from the rapid development of China’s urban rail construction, the company, as the leader of China’s urban rail signaling system, is expected to fully benefit in the future. It is expected that the performance will enter a rapid volume period and maintain the “overweight” rating.
Risk warning: risk of industrial policy change; Market competition intensifies risks; Risk of R & D failure or technology failure to industrialization; Risk management of goods issued and accounts receivable; Risk of seasonal fluctuations in income.
