STEC(SH:600820) GF SECURITIES·2024-08-07 01:01Investment Rating - The report assigns a "Buy" rating to the company with a target price of 8.13 CNY per share, compared to the current price of 6.87 CNY [4]. Core Viewpoints - The company is a leading state-owned enterprise in Shanghai's infrastructure construction, showcasing significant integrated advantages across investment, design, construction, and operation. From 2018 to 2023, the company's revenue grew at a CAGR of 15%, while net profit attributable to shareholders grew at a CAGR of 8.4%. The company maintains a cash flow and overall gross margin above the industry average, with a net cash ratio consistently above 1 and a dividend payout ratio of over 30% [2][3]. - The traditional main business remains stable, with a dual approach of heavy and light asset operations to create a second growth curve. In 2023, the company signed new orders worth 95.38 billion CNY, a year-on-year increase of 14.11%. The operational business has seen a CAGR of 62% from 2019 to 2023. Heavy asset operations involve participation in domestic urban infrastructure construction through PPP and BOT models, while light asset operations are driven by a subsidiary that integrates resources and core technologies in underground engineering [2][3]. - The company focuses on new productivity driven by data elements, with a target for the data industry to grow at an average annual rate of over 20% by 2026. The company has established a smart management system and has won multiple digital construction and renovation projects. In 2023, the revenue from digital business reached 317 million CNY, with new contracts signed in the first half of 2024 amounting to 231 million CNY [2][3]. Summary by Sections Section 1: Focus on the Full Industry Chain of Infrastructure Construction - The company has developed into a leading integrated urban construction operator over nearly 60 years, providing comprehensive services from planning to operation. It became the first listed company in the national infrastructure sector in 1994 and has undergone significant restructuring and acquisitions to enhance its capabilities [39][41]. Section 2: Stable Performance of Traditional Construction Business - The construction business remains dominant, contributing 82.70% of total revenue in 2023, with a year-on-year growth of 18.22%. The operational business also showed strong growth, with a revenue increase of 20.85% [43][46]. The company signed a total of 95.38 billion CNY in new orders in 2023, reflecting a robust order book and a focus on major infrastructure projects [57][58]. Section 3: Focus on New Productivity and Data Elements - The data element market is expected to grow significantly, supported by government policies. The company has developed a smart management system and is actively involved in digital transformation projects, with a notable increase in revenue from digital services [2][3][39]. Section 4: Profit Forecast and Investment Recommendations - The company is projected to achieve net profits of 3.194 billion CNY, 3.517 billion CNY, and 3.879 billion CNY for the years 2024, 2025, and 2026, respectively. The report suggests a valuation based on a PE ratio of 8 times for 2024, leading to a target price of 8.13 CNY per share [2][3].