\u3000\u3000 Daqin Railway Co.Ltd(601006) (601006)
Key investment points
The transportation of electricity and coal continued, and the supply and demand of coal transportation were booming at the end of the year
As the main artery of coal transportation from west to East, the transportation volume of Daqin line increased by 4.3% year-on-year to 39.57 million tons in December; 11. In December, the total transportation volume was 77.735 million tons, a year-on-year increase of 2.7%.
1) on the supply side, the national coal security work continues to advance. According to the data of the coal market network, a total of 5 batches of 100 coal mines have been approved in the supply guarantee stage in 2021, with a total capacity increase of about 420 million tons.
2) at the transportation end, in the peak coal season, China Railway Group focuses on ensuring the supply and export of coal in the three western regions. Taiyuan Bureau group promotes the supply and demand of electric coal with high quality by opening a series of measures such as green channels for priority verification, air distribution, loading, release and unloading of electric coal supply and demand guarantee freight trains.
3) on the demand side, the coal inventory of Qinhuangdao and Caofeidian ports is 8.46 million tons (as of 2022 / 1 / 7), down 12.0% month on month, and the coal demand at the material terminal is still booming.
Coal and other bulk railway traffic is still expected to grow steadily. According to the working meeting of China Railway Group on January 4, the incremental action of railway freight will be continuously deepened in 2022 to further promote the adjustment of bulk transportation structure. Under the expectation of infrastructure development, the traffic volume is expected to maintain steady growth.
The annual transportation volume of Daqin line in 2021 is 421 million tons, and it is estimated that 430-440 million tons will be transported in 2022
The traffic volume of Daqin line is still increasing year-on-year under multiple accidental factors. Due to the adverse effects of triple accidental factors such as restricted operation in coal producing areas and ports during national festivals, frequent natural disasters in North China and abnormal weather in flood season on coal supply, demand and transportation, the traffic volume of Daqin Line decreased by 21.2% in July and 6.9% in Q3. In 2021, the traffic volume of Daqin line recorded 421 million tons, a year-on-year increase of + 3.96%, still maintaining a positive growth. In 2022, the trend of transferring bulk goods to railway will continue. We expect the transportation volume of Daqin line to be about 430-440 million tons.
In the long run, environmental protection policies such as dual control of energy consumption and carbon neutralization have a slight impact, and there is still room for traffic volume improvement
Environmental protection policies such as dual control of energy consumption and carbon neutralization may affect the overall coal demand, but in the long run, the transportation volume of Daqin line is still supported by “three layers of safety cushion”: 1) the coal source structure is adjusted, the coal producing areas continue to concentrate in the three West regions, and the regional advantages are consolidated Daqin Railway Co.Ltd(601006) the main business moat; 2) The transportation structure is adjusted, the transfer from public to railway is continuously promoted, and the state railway group cooperates with local governments and enterprises to promote the incremental action of railway freight; 3) The diversion of competitive lines is weak. Compared with the four main lines of West to east coal transportation, the transportation cost advantage of Daqin line still exists. With the centralized coal source, the transfer of bulk transportation to rail and the resonance of low transportation cost, the Daqin line has sufficient support at the demand end.
From 2020 to 2022, the cash dividend per share shall not be less than 0.48 yuan, supporting the absolute income
According to the company’s dividend return plan for 2020-2022, the annual cash dividend per share shall not be less than 0.48 yuan / share. The commitment will be fulfilled in 2020, with a dividend of 4.8 yuan for 10 shares, with a dividend proportion of 65.5%. The dividend income of the company corresponding to the current closing price (2022 / 01 / 07) in 2021 can reach 7.4%, and the bottom absolute income.
Profit forecast and valuation
Assuming that the traffic volume of Datong Qinhuangdao railway increases steadily and the freight rate adjustment is not considered temporarily, we expect the net profit attributable to the parent company to be RMB 12.212 billion, RMB 13.526 billion and RMB 13.808 billion respectively from 2021 to 2023. In addition, the company’s current Pb (LF) is only 0.8 times, the safety margin is sufficient and there is a definite dividend income bottom, maintaining the “overweight” rating.
Risk tip: coal demand has dropped sharply; The mass transit railway is difficult to sustain; Volume diversion on competitive lines.
