Why Is It Difficult To Sustain The Market Value For The First Listed Company With Revenue Of 100 Billion In Shaanxi Province?

Shaanxi Construction Engineering Group Co., Ltd., which is listed as a whole, is expected to achieve the goal of stepping into the world's top 500 three years ahead of schedule.

In 2020, the total operating revenue will reach 127.72 billion yuan, with a year-on-year increase of 22.2%, and the net profit attributable to the parent company will reach 2.83 billion yuan, with a year-on-year increase of 84%.

The first annual report of Shaanxi Construction Engineering Group, which has just realized the reorganization and listing, has set a new high point against the market.

This is the first listed company with A-share revenue exceeding 100 billion among 59 listed companies in Shaanxi plate.

A few days ago, the 21st century economic reporter attended the performance presentation meeting of Shaanxi Construction Engineering Group Co., Ltd., and the company's management disclosed the profit distribution plan for 2020. Based on the company's total capital stock of 3.751 billion shares, cash dividends of 0.62 yuan (including tax) were distributed for every 10 shares, totaling 233 million yuan in cash.

The data also set a record for corporate dividends in recent years.

Through reorganization and extension, Shaanxi Construction Engineering Group successfully realized the overall listing, which became the classic case of state-owned assets securitization reform with the largest scale, the most extensive influence and the fastest progress in Shaanxi Province.

The annual report in 2020 and the first quarter report in 2021 announced that the listing performance of Shaanxi Construction Engineering Group Co., Ltd. was both good.

After the annual report of 2020 reached a new record, the company's performance in the first quarter of 2021 increased significantly again. In the first quarter of 2021, the total operating revenue was 30.41 billion yuan, with a year-on-year increase of 132.2%, and the net profit attributable to the parent company was 740 million yuan, with a year-on-year increase of 1375.9%.

The relevant person in charge of Shaanxi Construction Engineering disclosed to the reporter of the 21st century economic report that the company's business performance is expected to reach a new record this year.

Undervalued market value

It is understood that Shaanxi Construction Engineering Group was founded in March 1950 and is the first batch of state-owned construction enterprises growing up with the Republic of China.

In 2019, Shaanxi Construction Engineering Co., Ltd. will complete the overall restructuring. In June 2020, it will be listed as a whole through Yanchang chemical construction reorganization. In October 2020, with the approval of China Securities Regulatory Commission, Shaanxi construction engineering will land in the capital market. In the first annual report after listing, Shaanxi Construction Engineering Group Co., Ltd. became the largest revenue of A-share Shaanxi plate.

According to the statistics of 21st century economic report, there are 59 listed companies in Shaanxi plate of A-share market. In 2020, Shaanxi coal industry has the largest revenue, with a total revenue of 94.860 billion yuan.

After landing on the capital market, Shaanxi Construction Engineering Group will achieve a total operating revenue of 127.72 billion yuan in 2020, becoming the company with the largest revenue of Listed Companies in Shaanxi.

At the same time, Shaanxi Construction Engineering Group is also the second listed company with total assets of Shaanxi plate. According to statistics, there are three listed companies with total assets of more than 100 billion yuan in Shaanxi plate, namely bank of Xi'an 310.6 billion yuan, Shaanxi Construction Engineering 189.3 billion yuan, and Shaanxi coal industry 152.2 billion yuan.

Shaanxi Construction Engineering Group was listed as a whole, becoming the second A-share company in Shaanxi.

According to the relevant person in charge of Shaanxi Construction Engineering Co., Ltd., Shaanxi Construction Engineering Co., Ltd. is the top 6 construction enterprises in the A-share market revenue ranking.

According to the statistics of 21st century economic report, there are three A-share listed companies with a market value of over 100 billion yuan in Shaanxi Province, namely, the market value of Longji shares is 385.4 billion yuan, the market value of Shaanxi coal industry is 119.8 billion yuan, and the market value of Hangfa power is 116.9 billion yuan. The market value of Shaanxi Construction Engineering Group, which has just been listed, is only 16.8 billion yuan, even lower than the owner's equity of 17.274 billion yuan at the end of 2020, ranking 15th in Shaanxi plate.

According to the data of 2020 annual report, CSCEC, which is directly controlled by SASAC and established in 1982, ranks the highest in terms of revenue of Listed Companies in China's construction industry, with a revenue of 1.62 trillion yuan in 2020, followed by China Railway Construction Corporation (CRCC) of 910.325 billion yuan, CCCC of 627.586 billion yuan and Gezhouba of 112.611 billion yuan.

The above four enterprises are all state-owned enterprises controlled by SASAC.

Among the provincial local construction enterprises, only Shanghai Construction Engineering Group has more revenue than Shaanxi Construction Engineering Group. Its revenue in 2020 is 231327 million yuan, and the current market value is 26.1 billion yuan.

Shaanxi Construction Engineering Group ranks the sixth in the revenue scale of state-owned construction industry listed companies, followed by Sichuan Road and bridge, with revenue of 61.07 billion yuan in 2020, and its market value of 35 billion yuan at present, more than double that of Shaanxi Construction Engineering Group.

Competitive advantage of dual main business

The reporter of the 21st century economic report has noticed that compared with the state-owned construction listed companies, the competitive advantage of Shaanxi construction engineering is not bad.

Prior to the restructuring with Yanchang Chemical Construction Co., Ltd., the main business of the listed company was petrochemical engineering contracting business, with annual revenue of less than 10 billion yuan and net profit of about 100 million yuan. In 2019, the revenue of Yanchang chemical construction is 8.068 billion yuan, and the net profit is 296 million yuan, a year-on-year decrease of 15.04%. After the completion of the reorganization, the listed companies were newly incorporated into the construction engineering business to realize the dual main business operation, and the competitive advantage was obviously improved.

At present, the main business and business model of Shaanxi Construction Engineering Group has changed from petrochemical engineering contracting to regional leading construction enterprise with complete construction qualification. As an old brand construction engineering enterprise, Shaanxi Construction Engineering's qualification and brand advantages can even be benchmarked with CSCEC.

According to the public data, Shaanxi Construction Engineering Group and its subsidiaries currently have 9 super grade general contracting qualifications for construction projects, 4 special grade general contracting qualifications for municipal public works construction, 1 special qualification for general contracting of petrochemical engineering construction, 1 special qualification for general contracting of highway engineering construction, 25 grade a design qualifications, and overseas operation rights. They have engineering investment, survey, design, construction, construction, etc Management as one of the general contracting capacity.

In 2019, Shaanxi Construction Engineering Group achieved a revenue of 117.792 billion yuan, ranking 17th among ENR global engineering contractors and 181 among China's top 500 enterprises. It is the "leader" in the construction industry of Shaanxi Province.

It is reported that in the past 70 years, Shaanxi Construction Engineering Group Co., Ltd. has won 70 Luban awards, which are the highest engineering quality awards in China's construction industry. In particular, in 2020, the science and technology innovation port project in Western China won the Luban Award, the largest group in the history of building area.

Since the 13th five year plan, Shaanxi Construction Engineering Group has been in the forefront of the country with an average annual acquisition of 4. In addition, Shaanxi construction also won 86 National Quality Engineering Awards and 3 Zhan Tianyou awards; One achievement won the second prize of national science and technology progress award, and achieved a zero breakthrough in the country's highest science and technology field.

Why is the 70 year brand advantage of Shaanxi Construction Engineering Co., Ltd. underestimated by the market?

Industry analysts believe that the construction industry in which the company is located has a high degree of correlation with other industries, and is easily affected and restricted by the national macroeconomic development situation, fiscal, tax, monetary policies and fixed asset investment. At the same time, the common feature of the industry is that the asset liability ratio is generally high, so it needs to face higher financial risks.

This is also a common concern of investors at the performance presentation meeting of Shaanxi Construction Engineering. According to the data, by the end of 2020, the asset liability ratio of Shaanxi Construction Engineering Group Co., Ltd. is as high as 90.51%.

However, Shaanxi Construction Engineering Group told the 21st century economic reporter that in 2020, the cash received from selling goods and providing labor services was 95.346 billion yuan, and the cash inflow from operating activities was more than 101.395 billion yuan, which could completely cover the company's debt repayment scale, and the company did not have great debt pressure.

At the same time, the overall listing of Shaanxi Construction Engineering Group Co., Ltd. will help to broaden its own financing channels, expand its operation scale, and further improve its ability to resist risks. At the same time, it will also produce demonstration significance for Shaanxi state-owned enterprise reform and upgrading the level of state-owned asset securitization.

It has been revealed that Shaanxi Construction Engineering Group has planned to reduce the pressure on assets and liabilities through collection of accounts receivable and development of financing channels. In 2021, the company's assets and liabilities are expected to be reduced to about 80%.

Benchmarking the world's top 500

Shaanxi Construction Engineering Co., Ltd. said to investors that through the implementation of restructuring and listing, on the basis of the original advantages, it has inherited the competitive advantage of the target company Shaanxi Construction Co., Ltd. (the former Shaanxi Construction Co., Ltd.), and the core competitiveness of the company has been further expanded. The development of Shaanxi construction engineering will step into a fast lane and step to a new level. The overall listing is not only the end of the stage work, but also the new beginning of sprint to the world's top 500.

In 2017, Shaanxi Construction Engineering Group put forward the development strategic goal of "five years and two steps", that is to build "Shaanxi construction with revenue of 100 billion yuan" by 2020, realize the overall listing in three to five years, and advance to the world's top 500.

According to its business data, in 2018, Shaanxi Construction Engineering Group achieved a revenue breakthrough of 100 billion yuan two years ahead of schedule. On December 7, 2020, with the approval of the CSRC, it realized the overall listing, and achieved the goal two years ahead of schedule.

At present, how far is the rapid development of Shaanxi Construction Engineering Group from the goal of the world's top 500?

According to the "2020 world top 500 list" data released by Fortune magazine, a total of 124 enterprises in mainland China have entered the world's top 500 list, surpassing 121 in the United States for the first time, becoming a country with the largest number of world top 500 enterprises.

Shanxi Yangquan Coal Industry and Shanxi Jincheng Anthracite Coal industry ranked the last two of the world's top 500, with revenue of US $25.491 billion and US $25.386 billion respectively.

According to the revenue standard of the world's top 500 in 2020, the entry threshold is that the annual revenue exceeds 176 billion yuan.

According to the annual report of Shaanxi Construction Engineering Group, during the reporting period of 2020, the total amount of new contracts signed by the company has reached 274.913 billion yuan, including 20.873 billion yuan for Shaanxi provincial market, 64.746 billion yuan for external markets and 8.294 billion yuan for overseas markets.

In 2021, Shaanxi Construction Engineering Group plans to complete the contract amount of 320 billion yuan and realize the operating revenue of 140 billion yuan. According to the growth rate calculation, the revenue of Shaanxi Construction Engineering Group is expected to exceed 200 billion yuan in 2023.

It is worth noting that since the outbreak of new crown pneumonia in 2020, the world economy is facing a downward trend. Besides mainland China, the world's top 500 enterprises are generally facing business pressure. If the revenue of the world's top 500 enterprises drops sharply, Shaanxi Construction Engineering Group is expected to achieve the goal of becoming the world's top 500 ahead of time.