Zhejiang Comm.Tech.(002061)2024-12-19 01:49Investment Rating - The report assigns a "Buy" rating to the company with a target price of 5.39 CNY per share based on a 9x PE valuation for 2025 [5][131]. Core Insights - Zhejiang Jiaokai is a leading player in the transportation infrastructure construction industry in Zhejiang Province, with a stable growth trajectory. The company reported a revenue of 46 billion CNY in 2023, with a CAGR of 11.8% from 2018 to 2023. The net profit attributable to the parent company for 2023 was 1.29 billion CNY, with a CAGR of 1.8% during the same period [3][41]. - The company benefits from strong demand for transportation investment in Zhejiang, with the major shareholder, Zhejiang Transportation Investment Group, playing a crucial role in infrastructure projects. The total road mileage in Zhejiang is expected to reach 128,000 km by the end of the "14th Five-Year Plan," with significant contributions from the company [3][60]. - The company is diversifying its business, with a notable increase in non-construction engineering orders, which rose from 17.1% to 36.4% from 2020 to 2023 [3][75]. - The maintenance business and construction industrialization are key growth areas, with maintenance revenue growing from 1.83 billion CNY in 2018 to 4.12 billion CNY in 2023, reflecting a CAGR of 17.7% [3][86]. Summary by Sections Company Overview - Zhejiang Jiaokai focuses on infrastructure construction, having transitioned from a chemical company to a construction-focused entity. The company has been listed since 2017 and has a diverse portfolio including transportation, urban construction, and maintenance [3][24]. Financial Performance - The company achieved a revenue of 46.05 billion CNY in 2023, with a slight decline of 1.2% from the previous year. The net profit attributable to the parent company was 1.35 billion CNY, down 13.3% year-on-year [4][41]. - The company expects net profits of 1.43 billion CNY, 1.56 billion CNY, and 1.71 billion CNY for 2024, 2025, and 2026, respectively [3][128]. Market Position and Growth Drivers - The company is well-positioned to benefit from the ongoing infrastructure investments in Zhejiang, with a projected total investment of 2 trillion CNY during the "14th Five-Year Plan" [3][60]. - The company has a strong order backlog, with a total contract amount of 238.34 billion CNY as of Q3 2024, indicating robust future revenue potential [3][71]. Diversification and Innovation - The company is expanding its non-construction engineering business and has made significant strides in maintenance and industrialization, with a focus on digitalization and automation in its operations [3][86][94]. - The construction industrialization segment has seen a growth in revenue, with 24 industrialization bases established, contributing to increased efficiency and reduced costs [3][115]. Profitability and Valuation - The report forecasts a stable gross margin of around 8.6% for the next few years, with a focus on maintaining profitability through operational efficiencies [3][128]. - The company is valued at a reasonable PE ratio compared to its peers, reflecting its strong market position and growth prospects [5][131].