\u3000\u30 Shenzhen Guohua Network Security Technology Co.Ltd(000004) 98 Shandong Hi-Speed Road&Bridge Co.Ltd(000498) )
Event: the company released an annual report. In 2021, the company achieved an operating revenue of 57.52 billion yuan, a year-on-year increase of 67.0%, and a net profit attributable to shareholders of 2.13 billion yuan, a year-on-year increase of 59.5%, eps1.5% 37 yuan. At the same time, the company released the first quarter report of 2022. In the first quarter, the company achieved a revenue of 10.52 billion yuan, a year-on-year increase of 61.6%, and a net profit attributable to shareholders of 240 million yuan, a year-on-year increase of 47.9%.
Emerging businesses support performance growth, reduce costs and increase efficiency, and improve profitability. In 2021, the company achieved an operating revenue of 57.52 billion yuan, a year-on-year increase of 67.0%, and a net profit attributable to shareholders of 2.13 billion yuan, a year-on-year increase of 59.5%. Both revenue and net profit attributable to the parent company achieved the highest growth rate in recent ten years, mainly due to 1) the company strengthened market development while consolidating road and bridge construction business this year, and its business expanded rapidly; 2) Reduce the construction cost and improve the profitability of the project through standardized construction and internal resource allocation; 3) A number of M & A enterprises released production capacity and contributed to some performance. In terms of business, the company’s road and bridge engineering construction business achieved a revenue of 51.87 billion yuan, a year-on-year increase of 74.3%, accounting for 90.2% of the operating revenue; The revenue of maintenance engineering construction business was 3.160 billion yuan, a year-on-year increase of 30.0%, accounting for 5.5% of the operating revenue; The engineering design consulting business achieved a revenue of 640 million yuan, a year-on-year increase of 526.1%, accounting for 1.1% of the operating revenue.
The construction and consulting business boosted the gross profit, and the provision for impairment reduced the net interest rate. The company’s gross profit margin in 2021 was 11.8%, up 1.4pp year-on-year; The net interest rate was 4.8%, a year-on-year decrease of 0.5pp; The expense rate during the period was 5.5%, with a year-on-year increase of 0.4pp. The increase in gross profit margin was mainly driven by construction business and engineering design consulting business. The net cash flow generated from the company’s operating activities was 2.36 billion, with a year-on-year increase of – 341.8%, mainly due to the increase of contract price paid by owners through commercial bills, and the increase of accounts receivable due to the increase of unmeasured assets after the completion of some projects. The company’s cash to cash ratio and cash to cash ratio are 62% and 66% respectively. The provision for asset impairment is 320 million and credit impairment is 60 million. The gross profit margin of the company in the first quarter of 2022 was 9.9%, mainly affected by the epidemic, with a year-on-year decrease of 1.4pp; The net interest rate was 2.8%, a year-on-year decrease of 0.4pp; The expense rate during the period was 5.9%, with a year-on-year decrease of 0.9pp.
Actively expand high-quality projects in new fields, and the amount of newly signed orders increased significantly year-on-year. In 2021, while consolidating the traditional road and bridge construction business, the company actively explored business fields such as municipal administration, industrial park, comprehensive development of urban area, railway, water environment treatment and land consolidation, increased high-quality projects and enhanced anti risk ability. The bid winning amount of newly signed orders this year was 101.04 billion yuan, a year-on-year increase of 44.0%.
The strength of transportation infrastructure remains high, superimposing the advantages of shareholders, and the growth space of the company is further opened. During the “14th five year plan” period in Shandong Province, the total railway mileage will reach 9700 kilometers, with an average annual increase of 560 kilometers; The mileage of urban rail transit operation and construction in progress has reached 700 km; The mileage of Expressway open to traffic and under construction has reached 10000 kilometers, with an average annual increase of 500 kilometers After the combination of Shandong Hi-Speed Company Limited(600350) group and Qilu transportation, the assets of Shandong Hi-Speed Company Limited(600350) road and bridge have achieved “great unification”. As a subsidiary, Shandong Hi-Speed Road&Bridge Co.Ltd(000498) is expected to benefit from policy support, business coordination, development benefits and other aspects. At the same time, the company actively expands the market in the field of railway and rail transportation, the proportion of orders increases year by year, and the market space is expected to be further opened.
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 23.8%. The company’s 2022 performance pe7 times comparable valuation, corresponding to the target price of 12.32 yuan, is given a “buy” rating for the first time.
Risk warning: macroeconomic downside risk and lower than expected risk of infrastructure investment.
