Investment Rating - The report gives an "Overweight" rating for the construction and decoration industry, indicating a positive outlook compared to the overall market performance [2][9]. Core Insights - The construction industry is experiencing a slowdown in investment, leading to pressure on corporate profits. Despite this, infrastructure investment remains stable, acting as a stabilizing force in the overall economy [3][4]. - The report highlights that companies with a net profit growth rate below -10% include China Railway, China Metallurgical Group, and others, while those with growth rates above 20% include Jianfa Hecheng and Zhi Te New Materials [3][4]. - The report suggests that weak investment could lead to a valuation recovery for central state-owned enterprises in the construction sector, as current valuations are low with a PE ratio of 12.4X and a PB ratio of 0.82X as of October 10, 2025 [3][4]. Summary by Sections Investment Trends - Fixed asset investment growth has slowed, with infrastructure investment showing a year-on-year increase of 5.4% for the first eight months of 2025. The report notes that while manufacturing and real estate are under pressure, infrastructure investment remains relatively stable [3][4]. Profit Forecasts - The report provides a forecast for net profit growth rates for key companies in the industry, categorizing them into various growth ranges, with several companies expected to face profit pressures in 2025 [4]. Valuation Analysis - The report includes a valuation table for key companies in the construction industry, indicating their earnings per share (EPS), PE ratios, and projected net profit growth rates for 2024 to 2026. For instance, China Railway is projected to have a net profit decline of 17% in 2025, while Jianfa Hecheng is expected to see a significant increase of 45% [4].

Market Overview - The engineering consulting services sector increased by 0.96% on October 10, with Huajian Group leading the gains [1] - The Shanghai Composite Index closed at 3897.03, down 0.94%, while the Shenzhen Component Index closed at 13355.42, down 2.7% [1] Top Performers - Huajian Group (600629) closed at 29.74, up 5.09% with a trading volume of 1.0814 million shares and a transaction value of 3.097 billion [1] - Deepwater Planning Institute (301038) closed at 25.76, up 3.87% with a trading volume of 99,500 shares and a transaction value of 256 million [1] - Shenzhen Urban Transport (301091) closed at 34.61, up 2.91% with a trading volume of 149,900 shares and a transaction value of 516 million [1] Underperformers - Hualan Group (301027) closed at 17.80, down 7.34% with a trading volume of 183,800 shares and a transaction value of 336 million [2] - Zhongjie Design (603017) closed at 10.59, down 2.58% with a trading volume of 206,200 shares and a transaction value of 218 million [2] - Taiji Industry (600667) closed at 8.76, down 2.12% with a trading volume of 2.4624 million shares and a transaction value of 2.148 billion [2] Capital Flow - The engineering consulting services sector experienced a net outflow of 265 million from institutional investors, while retail investors saw a net inflow of 225 million [2][3] - The top net inflows from retail investors were observed in Deep City Transport (301091) with a net inflow of 634.58 million [3] - The main net outflows were from Huajian Group (301027) with a net outflow of 466.14 million from retail investors [3]

Core Viewpoint - Jianfa Hecheng's stock price has shown a year-to-date increase of 17.59%, with recent fluctuations indicating a slight decline in the short term, while the company continues to demonstrate growth in revenue and net profit [1]. Financial Performance - For the first half of 2025, Jianfa Hecheng achieved a revenue of 3.393 billion yuan, representing a year-on-year growth of 7.67% [1]. - The net profit attributable to shareholders for the same period was 45.0448 million yuan, reflecting a year-on-year increase of 32.33% [1]. Stock Market Activity - On September 26, Jianfa Hecheng's stock rose by 2.02%, reaching 10.63 yuan per share, with a trading volume of 7.207 million yuan and a turnover rate of 0.26% [1]. - The company has a total market capitalization of 2.771 billion yuan [1]. - The net inflow of main funds was 784,100 yuan, with large orders accounting for 10.88% of the total [1]. Shareholder Information - As of June 30, the number of shareholders for Jianfa Hecheng was 7,504, a decrease of 1.48% from the previous period [1]. - The average number of circulating shares per shareholder increased by 1.51% to 34,737 shares [1]. Dividend Distribution - Since its A-share listing, Jianfa Hecheng has distributed a total of 120 million yuan in dividends, with 64.1657 million yuan distributed over the past three years [2].

Group 1: Market Overview - The current market indicates increasing pressure in the bond market, with risks potentially exceeding the influences of fundamentals and liquidity [2][11] - Recent adjustments in the bond market are largely seen as preparations for a bullish market expected around the end of 2024 [2][11] - Observations are needed for signals indicating a turning point in market sentiment, particularly regarding bond market pressures and potential positive signals [2][11] Group 2: Company Analysis - Jianfa Heceng (建发合诚) - Jianfa Heceng, a comprehensive engineering management consulting company, is expected to see significant profit growth, with projected net profits of 122 million, 140 million, and 160 million from 2025 to 2027, representing year-on-year growth rates of 27.4%, 14.7%, and 14.3% respectively [10][16] - The company is positioned to benefit from its relationship with Jianfa Group, which provides a robust platform for development and opportunities in a challenging real estate market [10][12] - Jianfa Heceng is actively seeking opportunities in urban renewal and business extension, aligning with national policies promoting urban development as a new growth engine [12][16] Group 3: Industry Insights - Cloud Computing - The cloud computing market is witnessing a divergence in capital expenditure (Capex) expectations, with traditional tech giants forecasting a combined Capex exceeding 350 billion for FY25, reflecting a 54% year-on-year increase [13][15] - Emerging cloud computing firms are benefiting from high growth in remaining performance obligations (RPO), with Oracle reporting a 359% year-on-year increase in RPO, indicating strong demand for cloud services [14][15] - The competition landscape is evolving with the introduction of ASIC chips, which are becoming increasingly relevant in AI applications, highlighting the need for companies to adapt to technological advancements [15][17]

Investment Rating - The industry investment rating is "Overweight" [2][26]. Core Viewpoints - Fixed asset investment has continued to weaken, with a cumulative year-on-year increase of only 0.5% for January to August 2025, a decrease of 1.1 percentage points compared to July 2025. Manufacturing investment also saw a year-on-year increase of 5.1%, reflecting a similar decline [4][12]. - Infrastructure investment is under pressure, with transportation, water conservancy, and public utility investments all showing declining growth rates. Infrastructure investment (including all categories) increased by 5.4% year-on-year, down 1.9 percentage points from July 2025. Excluding electricity, the growth rate was only 2.0% [5][12]. - Real estate investment remains low, with a year-on-year decrease of 12.9% for January to August 2025, and construction starts down by 19.5% [12][18]. Summary by Sections Fixed Asset Investment - The cumulative year-on-year growth rate for fixed asset investment is 0.5%, down 1.1 percentage points from the previous month. Manufacturing investment growth is also down to 5.1% [4][12]. Infrastructure Investment - Infrastructure investment (all categories) shows a year-on-year increase of 5.4%, with a decline of 1.9 percentage points from the previous month. Excluding electricity, the growth rate is only 2.0% [5][12]. - Specific sectors like transportation and public utilities are experiencing significant pressure, with transportation investment growing by only 2.7% year-on-year [5][12]. Real Estate Investment - Real estate investment has decreased by 12.9% year-on-year, with construction starts down by 19.5% and completions down by 17.0% [12][18]. - The current cycle is characterized by excessive supply clearance and difficulties in inventory replenishment, leading to a slow recovery in investment [12][18]. Investment Recommendations - The report suggests that the overall industry is weak, but regional investments may gain flexibility as national strategic layouts deepen. Recommended companies include China Chemical, China Energy Construction, China Railway, and China Railway Construction among state-owned enterprises, and Zhi Te New Materials and Honglu Steel Structure among private enterprises [18].

Core Insights - The engineering consulting services sector saw an increase of 0.97% on September 15, with Huajian Group leading the gains [1] - The Shanghai Composite Index closed at 3860.5, down 0.26%, while the Shenzhen Component Index closed at 13005.77, up 0.63% [1] Sector Performance - Huajian Group (600629) closed at 17.18, up 9.99% with a trading volume of 629,900 shares and a transaction value of 1.059 billion [1] - Youan Design (300983) closed at 23.25, up 7.14% with a trading volume of 36,500 shares and a transaction value of 83.3674 million [1] - Huatu Chuanxie (300492) closed at 77.00, up 7.09% with a trading volume of 40,700 shares and a transaction value of 307 million [1] - Other notable performers include Shanshui Bide (300844) up 3.37%, Shanghai Jianke (603153) up 2.49%, and Huashe Group (603018) up 2.19% [1] Fund Flow Analysis - The engineering consulting services sector experienced a net outflow of 330 million from institutional investors, while retail investors saw a net inflow of 281 million [2] - The sector's overall fund flow indicates a mixed sentiment, with institutional investors pulling back while retail investors are more active [2] Individual Stock Fund Flow - Shanghai Jianke (603153) had a net outflow of 13.9475 million from institutional investors, while retail investors contributed a net inflow of 2.45666 million [3] - Huashe Group (603018) saw a net inflow of 9.5894 million from institutional investors, but a net outflow of 8.9502 million from retail investors [3] - Other stocks like Huatu Shanding (300492) and Youan Design (300983) also showed varied fund flows, indicating differing investor sentiments across the sector [3]

Investment Rating - The report initiates coverage with a "Buy" rating for the company [9][8] Core Viewpoints - The company is positioned for growth under the support of its major shareholder, the Jianfa Group, which enhances its operational platform and opportunities for development [8][9] - The company is actively seeking transformation opportunities in urban renewal and business extension, aligning with national policies promoting urban development [49][8] - The construction business is expected to grow significantly, with projected revenues and profits increasing over the next few years, reflecting resilience in a challenging market [9][7] Summary by Sections Company Overview - Jianfa Hecheng, established in 1995, specializes in engineering supervision, design consulting, and project management, and was listed on the Shanghai Stock Exchange in 2016 [18] - The company became controlled by the Xiamen State-owned Assets Supervision and Administration Commission after Jianfa Group acquired a 29.01% stake in 2021 [18] Business Expansion - The company has rapidly expanded its construction business, with revenues from this segment reaching 57 billion yuan in 2024, accounting for 86.2% of total revenue [24][22] - The construction business has seen a significant increase in revenue share from 30.2% in 2022 to 86.2% in 2024, indicating a strategic shift towards this area [24][22] Financial Data and Profit Forecast - Projected total revenue for 2025 is 9.371 billion yuan, with a year-on-year growth rate of 41.8% [7] - Expected net profit for 2025 is 122 million yuan, reflecting a growth rate of 27.4% [7] - The company’s earnings per share are projected to be 0.47 yuan in 2025, with a corresponding price-to-earnings ratio of 23X [9][7] Market Opportunities - The urban renewal initiative is anticipated to become a new growth engine for the construction industry, as the market transitions from new construction to renovation and maintenance of existing structures [49][8] - The company is actively pursuing mergers and acquisitions to expand its capabilities in new materials and technologies, enhancing its competitive edge in the evolving market landscape [48][8] Investment Analysis - The report estimates a market value of approximately 40 billion yuan for the company based on a conservative price-to-earnings multiple of 25.0X for 2027, indicating a potential upside of 34% from the current market capitalization of 28.3 billion yuan [9][8]

Investment Rating - The report initiates coverage with a "Buy" rating for the company [9][8][5] Core Views - The company is positioned for growth due to the synergy with its parent company, Jianfa Group, which provides a robust platform for development [8][54] - The construction business is expected to expand rapidly, benefiting from the strong performance of Jianfa Group in the real estate sector [8][54] - The shift towards urban renewal presents new growth opportunities as the industry transitions to a focus on existing buildings [56][54] Company Overview - Jianfa Hecheng, established in 1995, specializes in engineering supervision, design consulting, and project management, and was listed on the Shanghai Stock Exchange in 2016 [20][8] - The company became controlled by the Xiamen State-owned Assets Supervision and Administration Commission after Jianfa Group acquired a 29.01% stake in 2021 [20][8] Business Expansion - The company has seen rapid growth in its construction business, with total revenue reaching 6.609 billion yuan in 2024, a year-on-year increase of 67.5% [7][24] - The construction segment accounted for 86.2% of total revenue in 2024, indicating a significant shift in business focus [26][24] - The company aims to enhance its service capabilities and brand through its "Engineering Hospital" concept, which focuses on maintenance and renovation [56][54] Financial Data and Profit Forecast - The projected net profit for the company is expected to grow from 1.22 billion yuan in 2025 to 1.60 billion yuan in 2027, reflecting a compound annual growth rate (CAGR) of 22.6% [9][7] - The company’s price-to-earnings (PE) ratio is projected to decrease from 23X in 2025 to 18X in 2027, indicating potential for valuation improvement [9][7] Market Position and Competitive Advantage - Jianfa Group's strong market presence and ongoing investment in land acquisition provide a competitive edge, with land acquisition amounts reaching 519 billion yuan in 2024 [41][54] - The company’s construction orders are expected to increase as the real estate market stabilizes, with a projected order volume of 131 billion yuan in 2025 [52][54] Urban Renewal Opportunities - The shift towards urban renewal is anticipated to become a new growth engine for the construction industry, as highlighted by recent government initiatives [56][54] - The company is actively seeking to expand its business through mergers and acquisitions in new materials and technologies, aligning with industry trends [56][54]

Group 1 - The company held its first extraordinary general meeting of shareholders in 2025 on September 5, 2025, at a designated location in Xiamen [3][4] - The meeting was convened by the board of directors and chaired by Chairman Lin Weiguo, complying with the Company Law and the company's articles of association [2][3] - All proposed resolutions at the meeting were approved, including adjustments to the 2025 annual related party transaction limits and amendments to the company's articles of association [3][5] Group 2 - Non-independent director Kang Mingxu submitted a resignation report due to internal work adjustments, but will continue to hold other positions within the company [9][10] - The company held an employee representative meeting on September 5, 2025, where Kang Mingxu was elected as the employee representative director, ensuring compliance with legal requirements [10][12] - Kang Mingxu holds 2,102,100 shares in the company, representing 0.81% of the total share capital, and meets the qualifications for a director as per relevant laws and regulations [12]

Meeting Overview - The shareholders' meeting of Jianfa Hecheng Engineering Consulting Co., Ltd. was held on September 5, 2025, at the conference room on the 11th floor of Jinshan Wealth Plaza, Xiamen [1] - The meeting was convened by the board of directors and presided over by Chairman Lin Weiguo, complying with the Company Law and the Articles of Association [1][3] Voting Results - All non-cumulative voting proposals were approved with significant support from shareholders, with the approval rates for various proposals ranging from 99.8457% to 99.9597% [1][2] - The voting results indicated that the majority of A-share shareholders voted in favor, with minimal opposition and abstentions [1][2] Legal Compliance - The lawyers present confirmed that the meeting's convening and voting procedures adhered to the relevant legal regulations, ensuring the legitimacy of the meeting and the validity of the voting results [3]