\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 669 Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) )
Key investment points
The revenue of engineering business increased steadily, and the net profit of power operation business increased by 16%
In 2021, the company achieved a revenue of 448980 billion yuan, yoy + 11.75%. In terms of sectors, the five major businesses such as engineering contracting / survey and design / power investment and operation / real estate development / equipment leasing achieved revenue of 3568 / 162 / 203 / 295 / 6.5 billion yuan, yoy + 11.92% / + 19.15% / + 7.88% / 35.56% / 71.29%. 22q1, the company achieved a revenue of 128605 billion yuan, yoy + 6.05%. Core business:
1) project contracting business: in 2021, the revenue of three major sub businesses such as water conservancy and hydropower / other electric power industry / infrastructure reached 77.3/467232.7 billion yuan, yoy + 15.33% / + 20.69% / + 9.26%, and the revenue of water conservancy and hydropower and other electric power projects increased rapidly.
2) power investment and operation business: the revenue and gross profit margin of new energy power generation increased, driving the development of power investment and operation business. By the end of the 21st century, the company’s new energy group had put into operation and installed capacity of 7.63gw; In terms of increment, 1.0/0.16/0.08gw of wind power / photovoltaic / hydropower installed capacity was added in 21 years; In the 21st year, the revenue of the power investment and operation sector reached 20.3 billion yuan, yoy + 7.9%. Under the influence of low water supply from hydropower and high cost of power coal, the gross profit margin of the sector increased from – 7.0pct to 40.8% year-on-year; However, the new energy business performed well, with a revenue of 7.33 billion yuan, a year-on-year increase of + 17.2%, and a gross profit margin of 58.1%, a year-on-year increase of 1.5pct. Finally, the whole business segment realized a net profit of 2.904 billion yuan, a year-on-year increase of 16%.
Due to the superposition of multiple factors, the comprehensive gross profit margin declined in 21 years, and the impairment loss decreased under the high base
Decline in gross profit margin: 1) 21 years: the comprehensive gross profit margin of the company’s business was 13.11%, a decrease of 1.12pct compared with 20 years, mainly due to the decline in gross profit margin of engineering contracting, real estate development, equipment manufacturing and leasing business. Specifically: a) the gross profit margin of the main project contracting industry was only 9.92% in 2021, down 1.06 PCT year-on-year, affected by factors such as the continuous rise of labor, raw materials and logistics prices caused by the epidemic; b) The gross profit margin of the real estate development sector was only 11.85%, down 7.25 PCT, which was comprehensively affected by the fact that the gross profit margin of profit settlement projects was lower than that in the same period of 20 years and the profit of commercial real estate was lower than expected; c) The gross profit margin of equipment manufacturing and group business decreased by 17.08 PCT, mainly due to the large loss of house leasing business; 2) 22q1, the company’s business operations were basically stable, and the comprehensive gross profit margin of the company’s business in the first quarter was 11.1%, basically unchanged year-on-year.
Decrease in impairment loss: the total impairment loss of the company in 21 years was 3.737 billion yuan, a significant decrease from 5.583 billion yuan in 20 years. This is mainly because the impairment loss of construction in progress reached 1 billion yuan in 20 years, and this account has not been accrued in 21 years.
The decrease of financial expense ratio drives the improvement of expense ratio, and the accounting standards adjust the apparent cash flow
In terms of expense rate, the expense rate in the 21-year period is 8.61%, which is 0.72 PCT lower than that in the 20-year period. The sales / management / Finance / R & D expense rate is 0.31% / 2.96% / 1.75% / 3.58% respectively, which is + 0.04 / + 0.10 / – 0.64 / – 0.22 PCT higher than that in the 20-year period. The decrease of financial expense rate is mainly due to the increase of financing income and the decrease of net exchange loss recognized by PPP project with time progress;
In terms of cash flow: the net operating cash flow in 21 years was 15.62 billion yuan, a year-on-year decrease of 27.34 billion yuan, mainly due to the change of cash outflow from investment activities to operating activities during the construction period of PPP project calculated by financial asset model in accordance with the Interpretation No. 14 of the accounting standards of the Ministry of finance; The settled and invested costs did not form cash inflow in time.
The overall speed of investment and construction is accelerated, and the company is optimistic about the room for business transformation and value improvement
29% increase in new signing of energy and power projects: the company has signed 780.3 billion yuan of new contracts in 21 years, yoy + 15.9%, of which 240 billion yuan of new contracts have been signed for energy and power business, yoy + 28.6%. New energy orders increased significantly, and the newly signed business contracts for wind power / photovoltaic power generation / pumped storage power stations were 86.5/38/20.2 billion yuan respectively, with a year-on-year increase of 29.8% / 84.2% / 342.9%. 22q1, the company continued to achieve 247.6 billion yuan of new contracts on the basis of high base, with a year-on-year steady increase of 7.0%.
It is planned to start new energy with an installed capacity of more than 10GW and four approved pumping and storage power stations: the company’s annual investment plan for energy and power business in 22 years is 52.2 billion yuan, including 48.3 billion yuan of new energy, accounting for 92.5%; The planned new energy installation exceeds 10GW; It is planned to approve 4 pumped storage projects with a total installed capacity of about 5GW. The sand and gravel business has developed rapidly, and the capacity put into operation in 22 years is expected to double: in 21 years, the company’s green sand and gravel building materials business has completed an investment of 2.079 billion yuan, and the 22-year planned investment is 11.683 billion yuan, yoy + 561.95%. By the end of the 21st century, the company had obtained 6 sand and gravel resources projects, with reserves of 3.043 billion tons and an annual output of 134.5 million tons. Among them, one green sandstone project has been put into operation (Chizhou Changjiu limestone mine project), with a design annual capacity of 60 million tons. It is implemented in two phases. The first phase of 30 million tons has been put into operation, and the second phase is expected to be put into operation in 2022.
Completion of asset delivery, stripping of real estate business and injection of power grid auxiliary industry: on April 28, the company announced that the assets of its real estate sector had been replaced with the high-quality power grid auxiliary assets held by power construction group, and the real estate business was officially stripped from the company’s business, opening space for equity financing.
Profit forecast and valuation
Taking into account the injection of power grid auxiliary assets, it is estimated that the company’s operating revenue from 2022 to 2024 will be New Guomai Digital Culture Co.Ltd(600640) , 684330 and 764729 billion yuan, with a year-on-year increase of 33.97%, 13.93% and 11.75%, and the net profit attributable to the parent company will be 10.902, 12.610 and 14.686 billion yuan, with a year-on-year increase of 26.29%, 15.67% and 16.46%, corresponding to EPS of 0.71, 0.82 and 0.96 yuan. The current price corresponding to PE is 10.9, 9.4 and 9.1 times. Maintain the “overweight” rating.
Risk warning: the investment and construction of Shanxi Guoxin Energy Corporation Limited(600617) are not as expected; The development of the company’s new energy investment and construction business is less than expected; The progress of overseas projects is less than expected.
