Nanjing-Shanghai Expressway (600377): The absolute target of crossing the bull and bear

Nanjing-Shanghai Expressway (600377): The absolute target of crossing the bull and bear

Investment Highlights The development of Ninghu Expressway was resumed in advance: high dividends and continuous growth in performance growth.

From the end of 2008 to the end of 2018, the annual yield of Ninghu Expressway was 12%, and the annual excess yield was 5%, leading the highway sector.

After 10 years of reinstatement, the growth rate will gradually increase by 205%, of which 100% comes from performance growth, 68% comes from dividends, 57% comes from dividend reinvestment income, and -20% is affected by reduction and reduction.

  The location advantage is good, and the growth of highway main business is steady.

90% of the company’s profit comes from the expressway sector. The participating projects are located in the core area of the Yangtze River Delta. The quality of road products is excellent and the endogenous growth rate is guaranteed.

In 2018, it achieved operating income of 99.

700 million, five years growth.

43%; net profit attributable to mother 43.

770,000 yuan, an annual increase of 22%.

The company’s toll revenue has grown at a compound rate of 6 in the past 5 years.

9%, the compound growth rate of net profit reached 10%.

  The company has excellent corporate governance, diversified business prudent development, and stable revenue: the company’s supporting business is growing, real estate reserves are abundant, and financial gains are considerable. It will continue to contribute to the company’s performance.

Generally speaking, corporate governance is excellent, and diversified development is prudent and stable: from the perspective of investment proportion, diversified investment accounts for only 20% of total capital expenditure; the investment direction is stable for a long time, and finance and land belong to stable industries, and the highway returns steadily.In terms of return on investment, the company’s historical diversified investment has achieved solid returns.

  The ability to reinvest is strong, and new projects will continue to inject new vitality into the company.

In the history of Shanghai-Nanjing Expressway reconstruction and expansion, the acquisition of Ningchang Expressway, the actual tolls were more than 10% higher than the feasibility study expectations, reflecting the company’s excellent reinvestment ability.

Overall, reinvestment has greatly increased the company’s performance: Shanghai-Nanjing Expressway has gradually increased the company’s gross profit10 over the past 10 years.

US $ 300 million is the cornerstone of the company’s performance growth; the acquisition of Ningchang Expressway increased the company’s gross profit by 4 years.

70,000 yuan, is the company’s main business growth point in recent years.

At present, the company’s new projects include Wufengshan Bridge and North-South Connection, Changyi Expressway and Yichang Expressway. It is expected to open to traffic around 2020. The overall internal rate of return is higher than the industry level. It is expected to soon become profitable and become a new road businessPoints of profit growth.

  Investment strategy: The company ‘s core road production location is good, and its revenue is growing steadily. The historical acquisition of road production surpasses expectations, the diversified business has considerable returns, and it demonstrates excellent reinvestment capabilities. We expect that new projects will soon realize profitability and become a company’s sustainable development.Important guarantee.

We expect the company to maintain a high dividend payout policy in the future, with steady growth in performance.

We expect the company’s EPS to be zero in 19-21.

86, 0.

94, 1.

01 yuan, compared with the closing price of 11 on 北京夜网 December 31, 2019.

22 yuan, corresponding to PE 13.

1X, 11.

9X, 11.

1 X, assuming a dividend rate of 60% and a dividend yield of approximately 4.

6%, 5.

0%, 5.

4%, maintain “prudent overweight” rating.

  Risk reminder: The traffic volume is affected by the macro economy, new projects are less than expected, and industry policy risks.