China Power Construction (601669) ‘s First Coverage Report: Benefiting from Insufficient Infrastructure Supplements and One Belt One Road Repurchase Optimization Incentive Mechanism

China Power Construction (601669) ‘s First Coverage Report: Benefiting from Insufficient Infrastructure Supplements and One Belt One Road Repurchase Optimization Incentive Mechanism

This report reads: The company, as a domestic and global leader in water conservancy and hydropower construction, continues to have effective domestic infrastructure supplementary shortcomings and the Belt and Road intervention intervention. The company’s large-scale repurchases highlight confidence in mid- and long-term development and optimize incentive mechanisms to enhance performance.

Investment Highlights: Overwrite rating given for the first time.

The company is a comprehensive construction central enterprise whose main business covers multiple main industries such as energy, power, water environment treatment, and infrastructure. Benefiting from infrastructure supplementary shortcomings / environmental protection policies and its own comprehensive competitive advantages, future orders / performance will maintain steady growth.

We predict that the company’s EPS for 2019-2021 will be 0.

56/0.

64/0.

70 yuan, a growth rate of 11/14/10%.

With reference to the evaluation of comparable companies in the same industry, the company will be given October 2019.

1x PE with a target price of 5.

66 yuan, the first coverage given an overweight rating.

In the new calendar year of 2019, the single item maintains a rapid growth rate, which is conducive to the steady growth of performance.

1) The company signed a total of 3102 new contracts from January to July 2019.

800 million / growth rate +2.

9%, of which 2223 are domestic / overseas contracts.

100 million / 879.

100 million, a growth rate of +1.

2% / + 7.

5%; 2) View by 夜来香体验网 quarter: 2018Q1-2019Q2 new growth order growth rate + 4 / -15 / + 36 / + 67 / + 16 / + 15%, the company’s new growth order for 2019H2 is expected to maintain rapid growth under stable growth expectationsspeed.

A rough estimate is that the company’s current unexecuted orders exceed US $ 580 billion / about 2 times the revenue in 2018, and the consolidation of orders supports the growth of the performance; 2) The company, as a leader of infrastructure central enterprises, actively implements the Belt and Road coexistence and continues to deepen the overseas business layout and overseas infrastructure businessThere is still room for expansion.

The company’s significant advantages in the field of water conservancy and hydropower engineering construction will continue to benefit from shortcomings in infrastructure construction, and the implementation of share repurchases demonstrates the company’s long-term development confidence.

1) The company has undertaken more than 65% of domestic large and medium-sized hydropower stations construction tasks, more than 80% of planning and design tasks, and occupied more than 50% of the world’s large and medium-sized water conservancy and hydropower construction markets. Water conservancy, as an important area of infrastructure shortcomings, will promote investment in the future.Strong strength; 2) As of July 16, 2019, the company gradually repurchases 1.

5.3 billion shares (price range is 4.

86-5.

84 yuan / share) / total amount 7.

88 trillion demonstrates confidence in the company’s medium and long-term development.

50% of the repurchased shares are used to convert the company’s convertible bonds, 25% is used for employee shareholding plans, and 25% is used to allocate incentives, which is conducive to further optimizing the company’s incentive mechanism and improving the company’s leadership / core backbone performance motivation.

Catalysts: Infrastructure investment continued to pick up, single-speed growth in the new decade, and new business profits accelerated.

Risk warning: substantial tightening of fiscal and monetary policies, new long-term single reorganization, prominent trends in new business, etc.