CSCEC(601668) 光大证券·2024-07-03 04:02Investment Rating - The report maintains a "Buy" rating for China State Construction Engineering Corporation (601668.SH) with a current price of 5.44 CNY [1]. Core Insights - The company is considered an undervalued high-dividend stock with positive changes in its fundamentals. It has maintained a high return on equity (ROE) between 12.6% and 18.5%, with a dividend payout ratio around 20%, leading to a dividend yield of approximately 5.0% for 2023 [7]. - The company has signed new contracts worth 1.81 trillion CNY from January to May, representing a year-on-year growth of 12%, significantly outperforming other state-owned construction enterprises [7]. - The real estate sector is showing signs of marginal improvement, with the top 100 real estate companies' sales declining by 41.6% year-on-year, but the rate of decline is slowing [7][8]. Summary by Sections Market Data - Total shares outstanding: 41.62 billion - Total market capitalization: 226.41 billion CNY - One-year price range: 4.32 to 5.94 CNY - Three-month turnover rate: 27.53% [3]. Financial Performance - The company has shown strong profitability with a consistent ROE and a low price-to-book (PB) ratio of 0.54, indicating a historical percentile of 3.4% [7]. - Revenue projections for 2024-2026 are 2,438.02 billion CNY, 2,596.81 billion CNY, and 2,722.44 billion CNY respectively, with net profit estimates of 57.73 billion CNY, 60.98 billion CNY, and 63.01 billion CNY [9]. Contract and Order Growth - New contracts in the construction sector are robust, with significant contributions from both domestic and international markets. The company has seen a 10.6% increase in building contracts and a 37.4% increase in infrastructure contracts from January to May [7]. - The company is benefiting from a higher concentration of contracts as smaller firms exit the market, enhancing its market power [7]. Real Estate Sector Insights - The company’s real estate sales for January to May were 135.9 billion CNY, down 28.9% year-on-year, but the decline is narrowing [7]. - The company has strategically acquired land in first and second-tier cities, with over 83% of new land reserves located in major urban areas [8]. Financing and Cost Structure - The current low-interest-rate environment is expected to further reduce financing costs, aiding the company's expansion capabilities [7]. - The average interest rate for new corporate loans was 3.71% in May, reflecting a decrease compared to previous periods [7]. Valuation and Dividend Outlook - The company maintains a strong dividend policy with a projected dividend yield of 5.3% for 2024 and 5.5% for 2025 [9]. - The report emphasizes the company's strong earnings potential and low valuation metrics, reinforcing its attractiveness in a low-interest-rate market [7].