GOLDEN SUN SECURITIES·2024-08-31 04:12Investment Rating - The report maintains a "Buy" rating for China Railway Construction (601186.SH) [3] Core Views - The company's revenue for H1 2024 was CNY 516.1 billion, a decrease of 4.6% year-on-year, with a net profit attributable to shareholders of CNY 11.9 billion, down 12.8% year-on-year [1] - The decline in Q2 performance is attributed to slow progress in traditional infrastructure projects due to local funding constraints and a 0.8 percentage point increase in fee rates [1] - New contract signing in traditional infrastructure has decreased, while emerging sectors like mining and water conservancy show significant growth [2] Summary by Sections Financial Performance - H1 2024 revenue breakdown: CNY 4,516 billion from engineering contracting, CNY 80 billion from design consulting, CNY 112 billion from industrial manufacturing, CNY 315 billion from real estate development, and CNY 422 billion from logistics and others [1] - The company achieved a gross margin of 9.12%, an increase of 0.2 percentage points year-on-year, indicating improved profitability [1] - Operating cash flow showed a net outflow of CNY 81.7 billion, a significant increase in outflow compared to the previous year [1] Contracting and Order Book - New contracts signed in H1 2024 totaled CNY 1,100.6 billion, a decline of 19% year-on-year, with Q2 alone seeing a 33% drop [2] - The backlog of uncompleted contracts at the end of H1 2024 was CNY 7,123.1 billion, a 6.48% increase from the previous year, providing a solid order base for future revenue [2] Profitability and Valuation - The report forecasts net profits for 2024-2026 to be CNY 24.0 billion, CNY 25.2 billion, and CNY 25.8 billion respectively, with corresponding EPS of CNY 1.76, CNY 1.86, and CNY 1.90 [2] - The current stock price corresponds to a PE ratio of 4.5 for 2024, 4.2 for 2025, and 4.1 for 2026, indicating potential undervaluation [2]