STEC(600820) 国盛证券·2024-10-20 05:09Investment Rating - The report initiates coverage with a "Buy" rating for the company [1] Core Views - The company is a leading infrastructure construction and urban operation enterprise in Shanghai, with strong profitability and a robust business model [1] - The company's construction business is concentrated in the Yangtze River Delta region, benefiting from strong regional fiscal support and infrastructure investment demand [1] - The company's investment and operation business is expanding, with a significant increase in profit contribution, driven by PPP projects and infrastructure operation services [1] - The company is exploring data-driven business models, leveraging its extensive infrastructure operation data to create new growth opportunities [1] - The company's industrial fund investments, particularly in Huada Jiutian, have generated substantial returns and are expected to continue contributing to earnings [1] Financial Performance - The company's revenue and net profit have shown steady growth, with a CAGR of 12% and 9% respectively from 2013 to 2023 [1] - The company's construction business accounted for 83% of revenue in 2023, while investment and operation businesses contributed 12% [1] - The company's ROE has been increasing, driven by improved asset turnover and leverage, reaching 10.5% in 2023 [1] - The company's operating cash flow has remained positive, with a strong cash flow to revenue ratio of 4.3% in 2023 [1] Construction Business - The company's construction business is highly concentrated in the Yangtze River Delta, with 75% of revenue coming from Jiangsu, Zhejiang, and Shanghai in 2023 [1] - The company's new construction orders grew by 13% in H1 2024, with a strong order backlog of 2.1 times the 2023 revenue [1] - The company benefits from strong regional fiscal support, with Shanghai, Jiangsu, and Zhejiang having the highest comprehensive fiscal strength in China [1] Investment and Operation Business - The company's investment and operation business is growing, with revenue from operation services increasing by 21% in 2023 [1] - The company has 52 PPP projects, with 92% of the total investment completed, and 6 major projects already in the operation phase [1] - The company is exploring REITs to optimize its business model, with the Qianjiang Tunnel project being the first to apply for REITs [1] Data-Driven Business Models - The company is leveraging its extensive infrastructure operation data to explore new business models, with the first data product "Low-Speed Vehicle Spatiotemporal Data" achieving its first transaction in 2023 [1] - The company is well-positioned to benefit from the increasing tradability of data assets, with policies such as the "Data Twenty Articles" supporting data resource monetization [1] Industrial Fund Investments - The company's industrial fund investments, particularly in Huada Jiutian, have generated significant returns, contributing 2.66 billion yuan in investment income in 2023 [1] - The company still holds a substantial stake in Huada Jiutian, with potential for further earnings contribution [1] Valuation and Forecast - The company is forecasted to achieve net profits of 3.03 billion, 3.12 billion, and 3.25 billion yuan in 2024, 2025, and 2026, respectively, with a PE ratio of 7.1x, 6.9x, and 6.6x [1]