Haitong International ** Group *** Yu Nan, Luo Yali recently conducted research on Wantong Expressway and released a research report "First Coverage: Performance Elasticity Release, High Dividends Rise Steadily", this report gives an overweight rating to Wantong Expressway, and believes that its target price is 1237 yuan, the current stock price is 1102 yuan, the expected range is 1225%。
Anhui Expressway (600012).
The core road industry has a long remaining life and strong reinvestment ability in the main business. The overall road production is mainly inter-provincial trunk lines, with a long remaining life, among which the core road production Hening Expressway, Xuanguang Expressway and Gaojie Expressway have successively promoted reconstruction and expansion, and the operating life is expected to be extended by 25-30 years.
Potential release of income side: 1) The long-term GDP growth rate in Anhui is at a high level in the country, with a CAGR of 101%, undertaking industrial transfer, strong economic vitality, and net inflow of population to support the growth of traffic flow in Anhui, and the number of cars in Anhui Province in 2022 will increase by 24 compared with 20191%。2) The traffic of road trucks accounts for a relatively high proportion and has a high income elasticity in the pro-cyclical period. 3) Hening Expressway will complete the "four to eight" of the whole line by the end of 2022, and the traffic volume will double compared with before the reconstruction and expansion, and the Xuanguang Expressway will complete the "four to eight" by the end of 2024, and the traffic volume may increase significantly. The Nanjing-Xuanhang-Hangzhou Expressway and the first-class high-speed "Broken Road" have been opened one after another, and the synergistic effect of the road network is gradually emerging, and it is expected to turn losses into profits in 24 years.
The proportion of the cost side is down: 1) The straight-line method is used for the depreciation and amortization of road products, and the operating cost is a fixed cost, and the gross profit margin increases when the toll revenue increases, and the performance elasticity is large. 2) The debt level is healthy, and the financial expense ratio and period expense ratio are much lower than those of peers. Without significant capital expenditures, the company's overall financial expense ratio is on a downward trend, and we expect expenses to be relatively stable in other periods.
Profitability is high, and the dividend rate is stable and rising. The dividend rate reached 63% in 22 years, and it is planned to further increase to 70% in 2023-2025. If the acquisition of Liuwu Expressway continues to advance, the fixed increase is expected to increase to reduce the equity dilution ratio, and if it can be successfully implemented, the dividend ratio will be further increased, and the company's dividend ratio may be increased to 75% from 2023 to 2025.
Profitability** and valuation: The company's post-epidemic elastic recovery, reconstruction and expansion + smooth road network bring performance flexibility, the dividend rate is high and improved, and high dividends have allocation value. We expect the company's net profit attributable to the parent company in 2023, 2024 and 2025 to be 1724/18.66/19.6.9 billion yuan, corresponding to EPS of 104/1.12/1.$19. The highway target with high dividends, stable growth, bond-like and good cash flow has high defensive attributes and allocation value, and the economy **, the downward interest rate may be conducive to the increase in the valuation of the expressway sector and the Anhui Tong Expressway, giving 11 times the PE valuation in 2024, and the corresponding target price is 1237 yuan, the first coverage gave a "better than the market" rating.
Risks: slowing down in traffic growth, significant reductions in toll rates, larger-than-expected negative impact of renovation and expansion, failed acquisitions, interest rates**, etc.
*According to the calculation of the research report data released in the past three years, the research team of Huatai ** Shen Xiaofeng has studied the stock in depth, and the average accuracy of the past three years is as high as 8449%, and its ** attributable net profit in 2023 is 170.1 billion, **PE converted according to the current price is 1074。
The latest profit** breakdown is as follows:
A total of 4 institutions have rated the stock in the last 90 days, ** 4 have rated it;The average institutional price target over the last 90 days is 1273。
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