Gezhouba (600068): Proposed transfer of Hubei Daguangbei Expressway-Revitalizing existing assets to feed back the main business

Gezhouba (600068): Proposed transfer of Hubei Daguangbei Expressway-Revitalizing existing assets to feed back the main business
The company announced on October 23 that it plans to pre-list on the Beijing Stock Exchange and transfer 100% of its equity in the Hubei Daguangbei Expressway.Our comments are as follows: In the first half of the year, the Daguangbei Expressway operated well. Through the transfer of the company, the stock assets will be revitalized, the investment will be recovered in advance, and sufficient funds will be provided to support the sustainable and stable development of the main construction industry.Taking into account the uncertainties in equity transfers, continued tightening of PPP and consolidation of environmental protection business, we slightly cut our EPS forecast for 2019-21 to 0.99/1.15/1.34 yuan, maintain “Buy” rating. The operating profit of Daguangbei Expressway in 2019H1 is good, and the company can revitalize the existing assets by transferring the company’s assets to realize the early recovery of investment.Hubei Daguangbei Expressway is 147 kilometers, with a total investment of 54.02 million, the company began operations in 2009 after the completion of the project.Benefiting from the increase in traffic flow, Daguangbei Highway’s operating profit was good in the first half of this year, and its 2019H1 revenue / net profit was 2.64/0.72 ppm (earnings / net profit at the beginning of 2018 was 4.52 ppm / 709 million).At present, the concession right of the highway still expires in 20 years, and the net assets of the highway as of the first half of this year are 11.600 million. It is estimated that through the transfer of the Daguangbei Expressway, the company can revitalize the existing assets and realize the early recovery of investment. The strategic transformation is steadily advancing, and the main construction 深圳SPA会所 industry level is strengthened; revitalizing the existing assets will provide sufficient funds, and the company’s business will continue to grow steadily.Since last year, the company has developed a sound strategy to formulate “investment and business development” to promote the development of the general contracting business with investment and strengthen the main business layout of the building. Under the current macro background such as deleveraging and supply-side reforms, it is expected that revitalizing existing assets will provide the company withWith sufficient funds, the company’s business continued to develop steadily.As the strategic transformation advances, we expect construction orders to continue to stabilize and rebound. Q3 orders have grown steadily as a whole, and the effects of domestic professional transformation have begun to appear.On January 9, 2019, the company’s unit price in the new millennium was US $ 169.9 billion, a decade of +15.5%; Q3 single season new year single 295.8 ‰, +8 for ten years.6%.By region, the overseas / domestic new signing in January-September 2019 was 688 / 1,011 trillion, +28 in ten years.7% / + 7.9%. The growth of new overseas signings is still at a high level. The growth rate of new domestic signings has changed from negative to positive. The company specializes in the transformation of construction subsidiaries every year, and transforms the traditionally divided business areas by regions into specialized companies.It is expected to enhance the company’s resource integration capabilities and support the steady growth of the construction business. Risk factors: environmental protection business launch, PPP implementation, infrastructure investment recovery is less than expected; overseas operation risks; equity transfer uncertainty. Investment suggestion: Considering the uncertainty of equity transfer, the continued tightening of PPP and the consolidation of environmental protection business, we slightly cut our EPS forecast for 2019-21 to 0.99/1.15/1.34 yuan (previous forecast 1).02/1.18/1.38 yuan), the corresponding PE is 5.9x / 5.1x / 4.4x, maintain “Buy” rating.