\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 820 Shanghai Tunnel Engineering Co.Ltd(600820) )
Event: the company released its annual report for 2021. In 2021, it achieved an operating revenue of 62.23 billion yuan, a year-on-year increase of 15.2%, and a net profit attributable to shareholders of 2.39 billion yuan, a year-on-year increase of 5.9%.
The revenue increased steadily and the operation ability of the whole industrial chain was improved. In 2021, the company achieved an operating revenue of 62.23 billion yuan, a year-on-year increase of 15.2%, and a net profit attributable to shareholders of 2.39 billion yuan, a year-on-year increase of 5.9%. In terms of business, the construction business is still the main source of the company’s revenue. In 2021, the revenue reached 49.2 billion yuan, a year-on-year increase of 2.3%, accounting for 79.4%; The operating business achieved a revenue of 4.23 billion yuan, a year-on-year increase of 40.5%; The revenue of design services was 2.7 billion yuan, a year-on-year increase of 30.9%; Financial leasing business achieved a revenue of 440 million yuan, a year-on-year increase of 83.3%; The revenue of machining and manufacturing business was 330 million yuan, a year-on-year increase of 175%; The product sales business achieved a revenue of 210 million yuan, a year-on-year increase of 2.9%; The real estate business realized a revenue of 20 million yuan, a year-on-year decrease of 2.4%. Geographically, the company’s main business income sources are mainly concentrated in the Yangtze River Delta region such as Jiangsu, Zhejiang and Shanghai, and the operating income in Shanghai accounts for about 42.0%. On the premise of ensuring that the main business of the company is mainly construction, the company continues to implement the business strategy of “design leading and investment driving”, continuously improve the industrial chain, make up for the shortcomings of the operation business, and steadily promote the financial leasing business.
The real estate business boosted the overall gross profit of the company. In 2021, the company achieved a gross profit of 8.127 billion yuan, a year-on-year increase of 34.9% and a gross profit margin of 13.1%, an increase of 1.9pp over last year. Among them, the gross profit margin of construction business, design service, operation business, machining and mechanism, real estate business and product sales business was 9.0%, 30.7%, 28.5%, 7.3%, 22.8% and 10.0%, respectively -0.23pp, + 0.44pp, + 3.62pp, -12.04pp, + 98.08pp and + 3.36pp. The gross profit margin of the company was significantly driven by real estate business, operation business and product sales business. The company’s sales expenses decreased by 59.3% year-on-year, mainly affected by covid-19 epidemic, and business exchanges are more online; The financial expenses increased by 136.0% year-on-year, mainly due to the fact that the financial expenses are no longer capitalized during the construction of PPP project. The asset impairment loss increased by 23 million yuan compared with last year, which was due to the increase of inventory falling price loss and contract performance cost impairment loss. The company distributed a cash dividend of 2.3 yuan for every ten shares, accounting for 30.2% of the net profit attributable to the parent company, with a dividend rate of 4.5%.
The growth rate of newly signed orders was stable, and the growth rate of energy engineering and real estate engineering was rapid. In 2021, the company signed 5697 new projects, with an amount of 77.66 billion yuan, an increase of 12.8% year-on-year. Among them, the year-on-year growth of energy engineering and real estate engineering in construction business exceeded 50%, with a significant growth rate. Successively won the “PPP project of Hangzhou Jinqu Expressway Hangzhou shaotai expressway connecting line project”, “Henan Hebei provincial boundary Yuanyang (Lanyuan Expressway) section of Anyang Luoshan expressway”, “cr102 bid of Singapore Island crossing line phase I” and other key projects. All kinds of construction tasks were carried out smoothly, and about 110 kilometers of shield tunneling were completed during the period.
Shanghai’s “14th five year plan” promotes the high-quality development of transportation, and the company’s rail transit business may benefit. The 14th five year plan for Shanghai’s comprehensive transportation development focuses on the overall idea of “strengthening hubs, organizing networks, improving quality, improving governance and promoting transformation”, and proposes to continuously improve the super urban comprehensive transportation system characterized by “hub type, functionality, networking, intelligence and greening” by 2025. At the same time, it is proposed that the central city of Shanghai center can reach the adjacent cities in 60 minutes, the major hubs can reach the major cities in the Yangtze River Delta in 120 minutes, and the total mileage of rail transit urban lines and urban (suburban) railways can reach 960 kilometers. In addition, in 2022, 173 formal projects are planned for major construction projects in Shanghai, with a planned investment of more than 200 billion yuan, including 17 urban infrastructure projects involving municipal transportation, 15 external transportation and 11 rail transportation. As a regional state-owned enterprise leader, the company has undertaken more than 95% of the urban road operation and maintenance tasks in Shanghai. Its rail transit business is expected to fully benefit from and usher in rapid development during the 14th Five Year Plan period.
Profit forecast and investment suggestions. It is estimated that the compound growth rate of the company’s net profit attributable to the parent company from 2022 to 2024 is 13.9%. The company’s 2022 performance pe8 times comparable valuation, corresponding to the target price of 6.88 yuan, 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.
