SCG(SH:600170) Guotai Junan Securities·2024-04-28 01:32Investment Rating - The report maintains a rating of "Buy" for Shanghai Construction (600170) [2][3] - The target price is set at 3.13 CNY, down from the previous forecast of 3.64 CNY [2][3] Core Insights - The company's net profit is expected to grow by 15% in 2023, with significant improvement in operating cash flow [2] - The construction materials segment is experiencing relatively fast growth, while real estate development is dragging down overall performance [2] - The company is accelerating the liquidation of its real estate development business, with emerging businesses expected to continue stable growth [2] Financial Summary - In 2023, the company's revenue is projected to reach 30.46 billion CNY, with a net profit of 1.56 billion CNY [2][3] - The gross profit margin for 2023 is estimated at 8.87%, a slight decrease of 0.17 percentage points [2] - The operating cash flow for 2023 is expected to significantly improve to 21 billion CNY, compared to 9 billion CNY in the previous year [2][3] Earnings Forecast - The report forecasts an EPS of 0.19 CNY for 2023, down from the previous estimate of 0.32 CNY [2] - The EPS is projected to increase to 0.23 CNY by 2026 [2] Market Position - Shanghai Construction is one of the largest construction companies in China, involved in various construction projects, design, consulting, and equipment production [3] - The company has a total market capitalization of 21.06 billion CNY [2][3] Comparative Analysis - The report compares Shanghai Construction's PE ratio with peers, indicating a PE of 13.52 for 2023, which is lower than the industry average of 16.10 [6][7] - The average PE for comparable companies is noted to be significantly higher, suggesting potential undervaluation of Shanghai Construction [6]