20181203-中国银河国际证券-中国铁建-01186.HK-High_earnings_growth_visibility__maintain_BUY_6页_786kb
报告摘要
China Railway Construction Corporation (1186.HK) Summary
Core Content
China Railway Construction Corporation (CRCC) is a leading player in the domestic railway construction market and has demonstrated strong earnings growth in the first nine months of 2018 (9M18). Despite a relatively modest revenue growth, the company managed to achieve a 20.1% YoY increase in net profit, driven by margin expansion and market share gains in the Public-Private Partnership (PPP) segment. The report highlights the potential for sustained earnings growth in 2019E due to increased infrastructure Fixed Asset Investment (FAI) and continued exposure to the PPP market.
Main Points
- Earnings Growth: CRCC delivered a 20.1% YoY increase in net profit in 9M18, outperforming its peers.
- Revenue Growth: Total revenue in 9M18 increased by 6.4% YoY, but the growth was not driven by overall market expansion.
- Margin Expansion: Gross profit margin improved from 8.3% to 9.5% in 9M18, while net profit margin rose from 2.4% to 2.6%.
- PPP Projects: CRCC's exposure to PPP investment is increasing, contributing to higher margins and potential for continued earnings growth.
- Infrastructure FAI: Infrastructure FAI growth picked up in October 2018, with the railway segment showing a stronger rebound. The company expects railway FAI to exceed RMB800bn in 2019-2020E.
- Market Leadership: As the market leader in railway construction, CRCC is expected to benefit significantly from the rising railway FAI.
- Valuation: The company is currently trading at a discount of over 10% relative to its peers, providing potential for share price re-rating.
Key Financials
Revenue and Profit Trends
| Metric | 2015 (RMB m) | 2016 (RMB m) | 2017 (RMB m) | 2018E (RMB m) | 2019E (RMB m) |
|---|---|---|---|---|---|
| Sales Revenue | 600,539 | 629,327 | 680,981 | 735,607 | 796,602 |
| Net Profit | 12,645 | 14,000 | 16,057 | 19,327 | 22,226 |
| Net Margin (%) | 2.1% | 2.2% | 2.4% | 2.6% | 2.8% |
| EPS (RMB) | 0.98 | 1.01 | 1.09 | 1.31 | 1.51 |
EBITDA and Operating Performance
| Metric | 2015 (RMB m) | 2016 (RMB m) | 2017 (RMB m) | 2018E (RMB m) | 2019E (RMB m) |
|---|---|---|---|---|---|
| EBITDA | 32,519 | 33,930 | 36,271 | 43,473 | 48,239 |
| EBITDA Margin (%) | 5.4% | 5.4% | 5.3% | 5.9% | 6.1% |
| Net Profit Margin (%) | 2.1% | 2.2% | 2.4% | 2.6% | 2.8% |
Financial Ratios
| Ratio | 2015 (x) | 2016 (x) | 2017 (x) | 2018E (x) | 2019E (x) |
|---|---|---|---|---|---|
| EV/EBITDA | 4.7 | 4.4 | 3.7 | 3.8 | 4.0 |
| P/E | 9.0 | 8.8 | 8.2 | 6.8 | 5.9 |
| P/B | 1.1 | 0.9 | 0.8 | 0.7 | 0.7 |
| Net Debt/Equity (%) | 25.1% | 19.0% | 7.3% | 22.9% | 33.6% |
Investment Highlights
- Earnings Growth: CRCC's 9M18 net profit growth was primarily driven by market share gains and margin expansion in the PPP segment.
- Infrastructure FAI: Infrastructure FAI growth accelerated in October 2018, with the railway segment showing the most significant improvement.
- Target Price: The target price for CRCC was raised from HK$10.90 to HK$11.90, reflecting a 18.8% increase.
- EV/EBITDA Multiple: The target EV/EBITDA multiple was increased from 4.0x to 4.5x.
- Valuation Discount: Despite strong earnings growth prospects, CRCC still trades at a discount to its peers, indicating potential for share price re-rating.
Conclusion
CRCC is well-positioned to benefit from the accelerated infrastructure FAI and increasing PPP exposure. With a strong earnings growth outlook and a favorable valuation, the report recommends maintaining a BUY rating. The target price is based on the updated EV/EBITDA multiple and 2019E EBITDA and net debt forecasts, suggesting a 18.8% upside to the current price.
试读结束，高清完整版pdf/doc/ppt,请点下载
