\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 170 Shanghai Construction Group Co.Ltd(600170) )
Key investment points
Event: the company released its annual report for 2021. In 2021, it achieved an operating revenue of 281.06 billion yuan, a year-on-year increase of 21.5%, a net profit attributable to shareholders of 3.77 billion yuan, a year-on-year increase of 12.5% and EPS of 0.42 yuan.
The construction business made steady progress and the real estate business grew rapidly. In 2021, the company achieved an operating revenue of 281.06 billion yuan, a year-on-year increase of 21.5%, and a net profit attributable to shareholders of 3.77 billion yuan, a year-on-year increase of 12.5%. In terms of business, the scale of the company’s construction business was further expanded, with a revenue of 238.17 billion yuan, a year-on-year increase of 22.8%; The business scale of building materials industry continued to increase, with an income of 16.66 billion yuan, a year-on-year increase of 12.0%; The company accelerated the decommissioning and delivery of real estate projects, with an income of 13.85 billion yuan, a year-on-year increase of 119.5%, and the income scale doubled; The income from design consulting and urban construction investment business was 5.24 billion yuan and 1.3 billion yuan, a year-on-year decrease of 3.0% and 9.5%.
The gross profit scale of core business was increased, and the effect of cost control was initially shown. In 2021, the company realized a gross profit of 26.2 billion yuan, the gross profit scale of construction increased by 35.1% over the same period of last year, and the gross profit margin was 9.4%, a decrease of 0.2 percentage points compared with the same period of last year. The decrease of the company’s gross profit margin was mainly due to the real estate regulation policy. The gross profit margin of the company’s real estate development business was 7.3%, a year-on-year decrease of 13.7pp. The expense rate during the period was 7.2%, a slight increase over the same period, mainly due to the expansion of the company’s financing scale and the increase of interest expenditure. The impairment loss of the company’s assets increased by 530 million yuan, mainly due to the increased provision for falling price of some real estate projects, the loss of inventory falling price increased by 370 million yuan, and the impairment of contract assets increased by 130 million yuan, which caused a certain erosion to the company’s profits. The company pays a dividend of 1.45 yuan for every ten shares, and the cash dividend accounts for 34.3% of the net profit attributable to the parent company, with a dividend rate of 4.4%.
New orders continued to grow, and multiple business groups worked together to build market advantages. In 2021, a total of 442.51 billion yuan of new contracts were signed. Among the five main business segments of the company, the newly signed contracts for construction, design consulting and building materials industry amounted to 352.77 billion yuan, 23.54 billion yuan and 24.22 billion yuan, with a year-on-year increase of 12.7%, 21.3% and 17.6%, continuing to maintain double-digit growth. The newly signed contracts for real estate development and urban construction investment increased significantly compared with the same period of last year, with newly signed contracts amounting to 16.14 billion yuan and 14.85 billion yuan, with a year-on-year increase of 74.6% and 74.1%, The six emerging businesses are developing rapidly, with a total of 97.2 billion yuan of newly signed contracts and more than 100 billion yuan of contracts under construction, and the scale effect is gradually emerging.
In the new year, there is huge construction space for construction projects, and the company’s main business is still in the period of strategic opportunities. The company ranks 8th in “ENR’s 250 largest engineering contractors in the world” in 2021. Based on Shanghai, the company actively expands the regional market outside the province and actively integrates into the integrated development of the Yangtze River Delta, the construction of new areas near Hong Kong, the construction of Guangdong Hong Kong Macao Bay Area, the construction of Hainan free trade port, the coordinated development of Beijing Tianjin Hebei and the development of the Yangtze River economic belt. The output value of the construction industry is 49.7 billion yuan and the newly signed contract is 56.7 billion yuan. At the beginning of 2022, a total of more than 10 trillion yuan of investment in major projects was released across the country. Taking Shanghai as an example, the total investment in major project construction in the city this year is expected to exceed 200 billion yuan. During the 14th Five Year Plan period, the renovation of 2.8 million square meters of non complete sets of staff houses and small beam and thin sector houses will be fully launched, 50 million square meters of all kinds of old houses will be upgraded at a higher level, and 470000 new affordable rental houses will be built, By the end of this year, it is planned to build and raise 240000 affordable rental housing units, more than half of the total amount of the 14th five year plan. In the future, the company will continue to promote the “nationalization” development strategy, or will benefit from the development opportunities provided by the planned major engineering investment and construction projects.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 0.48 yuan, 0.55 yuan and 0.63 yuan respectively, and the corresponding PE will be 7, 6 and 5 times respectively, with a three-year compound growth rate of 14.2% in the net profit attributable to the parent company. According to the valuation of comparable companies, the company is given a PE of 9 times in 2022, corresponding to the target price of 4.32 yuan, and is given a “buy” rating for the first time.
Risk tips: macroeconomic downside risk, real estate policy change risk, infrastructure investment less than expected risk.
