DGKG(SZ:000828) Tai Ping Yang·2024-07-19 03:00Investment Rating - The report initiates coverage with a "Buy" rating for Dongguan Holdings, indicating a positive outlook for the stock [5]. Core Views - Dongguan Holdings focuses on its core highway operations while strategically divesting from subsidiaries, particularly in urban rail transit, to enhance its main business [8][11]. - The company reported a total revenue of 4.758 billion in 2023, a year-on-year increase of 15.93%, but a net profit of 652 million, reflecting a decrease of 19.56% compared to the previous year [3][4]. - The first quarter of 2024 saw a revenue drop to 426 million, a decrease of 26.78% year-on-year, while net profit surged by 59.3% to 403 million due to non-recurring gains from exiting the Dongguan Rail Line One project [3][4]. Summary by Sections Business Segments - The company operates in four main segments: 1. Transportation: Management of highways with a total length of approximately 55.66 km, achieving a record traffic volume of 125 million vehicles in 2023, up 16.43% year-on-year, generating toll revenue of 1.365 billion, an increase of 15.34% [4]. 2. Urban Rail Transit: The company has exited the Dongguan Rail Line One project, receiving a reduction payment of 3.71 billion [4]. 3. New Energy Vehicle Charging and Battery Swap: As of the report period, there are 110 charging stations and 5 battery swap stations [4]. 4. Financial Investment: Revenue from financing leasing and commercial factoring reached 2.398 billion, with a profit of 109 million [4]. Financial Performance - For 2023, the company reported total revenue of 4.758 billion, with a projected revenue drop to 3.311 billion in 2024, reflecting a year-on-year decrease of 30.4% [9]. - The net profit for 2023 was 667 million, with an expected increase to 1.129 billion in 2024, indicating a growth of 69.3% [9]. - The diluted earnings per share for 2023 was 0.64, projected to rise to 1.09 in 2024 [9]. Investment Outlook - The company is expected to gradually utilize received funds for highway expansion projects, alleviating financial pressure [5]. - Future dividend plans are under consideration, indicating a focus on shareholder returns [5].