[He Che 500]2.7 times PE to buy China Railway, can be a good harvest-He Che | Apple Daily

China Railway Group (390) went public at the end of 2007 with an offer price of 5.78 yuan and a current price of 3.73 yuan. It is 3 and a half dives, which makes people intuitively think that there is a problem with its performance. The fact is that the net profit of the IPO year was RMB 2.423 billion, and the forecast for 2021 was RMB 28.8 billion, an increase of 11 times, and an EPS increase of 5.5 times. Beginning in 2013 alone, there has been no one-year decline in profitability, with a cumulative increase of 153% in 8 years, a record high.

1) China Railway Group will earn 7% less year-on-year in Q1 of 2020, 18% more year-on-year in Q2, and a 32% year-on-year increase in Q3 earnings. Q1 to Q3 will earn 18% more year-on-year. It is predicted that the annual profit will be 25.5 billion yuan, an increase of 8%. In 2019, nearly 5 billion yuan came from the sale of subsidiaries. Excluding this project, China Railway’s 2020 profit forecast will increase by as much as 36%. The forecast for PE in 2020 is only 3 times.

2) China Railway announced earlier that in 2020, the total number of new contracts signed was 2.47 trillion yuan, an increase of 21%, which is equivalent to 188% of 2019’s annual revenue. It is predicted that the profit in 2021 will increase by another 13% to 28.8 billion yuan, and the PE will drop to 2.7 times (Bloomberg composite forecast 2.9 times), an average of 7.7 times in the past 6 years.

3) China Railway Group forecasts PB 0.3 times in 2021, 0.84 times on average in the past 6 years.

4) China Railway adopts a 19% low dividend policy, earns 100 yuan and only pays 19 yuan. The forecast dividend rate in 2021 is 7%. In the past 6 years, China Railway’s average dividend yield was only 2.4%. The 2021 forecast is 1.9 times higher than the average. This is because the stock price has fallen off the ground in recent years, and the current price has fallen by 70% from its 2015 high of 12.3 yuan.

5) Trump sanctioned railway infrastructure-related stocks (including China Communications Construction (1800), China Railway Construction (1186), CRRC (1766), but not China Railway) and related stocks during his last tenure.

With Biden on the scene, Trump’s influence gradually faded. Since the beginning of this year, CRRC shares have soared by 31%, China Railway Construction has increased by 14%, China Communications Construction has increased by 10%, and China Railway has only increased by 9%. China Railway is most worth chasing behind.

★ China Railway’s ultra-low valuation is expected to be partially repaired. The current price is 3.73 yuan to get on the train and there is a chance of a bumper harvest. PE has risen from 2.7 times to 5 times, showing 6.9 yuan, a potential increase of 85%. Credit Suisse is 8.66 yuan, and Huizheng is 8.1 yuan.

In the same scene, more than half of the eight largest securities firms in the A+H mainland with a market value of more than 100 billion yuan have issued last year’s performance bulletin, which is generally pretty. China Galaxy (6881) pointed to a net profit of 7.244 billion yuan last year, an increase of 39%; EPS 0.71 yuan, a sharp increase of 37%, that is, the PE in 2020 is only 5.6 times. The average PE of the other 7 major peers is 8.6 times; the PB of Galaxy 2020 is 0.53 times, and the peer average is 0.89 times. Galaxy Daping sells.

Galaxy has set aside 601 million yuan for impairment in its accounts last year. It is estimated that there will be no need to redistribute it in 2021. This change alone can increase its profit this year by 8%. The Chinese and Hong Kong stock markets have a good atmosphere this year, and trading is expected to increase sharply. Galaxy’s earnings forecast rose by another 25%, and its PE fell to 4.6 times, an average of 9.7 times in the past 6 years; the forecast PB was 0.44 times, and the 6-year average was 0.8 times.

Galaxy’s current price is 4.84 yuan, and the target price is revisited: 7 yuan, a potential increase of 45%. China Construction Bank paid 7.5 yuan, and Damon paid 6.38 yuan.

Genting Hong Kong (678), the “epidemic-related stock” recommended for purchase at RMB 0.315 on November 11 last year, rose by a maximum of 67% yesterday, and closed up 38% to close at RMB 0.45. The PB was still only 0.13 times.

Jacobson (2633) is also a “vaccine-related stock”. It only rose 3 points a day and closed at 1.1 yuan.

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