HTSC·2024-09-01 06:03Investment Rating - The investment rating for the company is "Buy" (maintained) with a target price of HKD 4.90 and RMB 8.94 [2][8]. Core Views - The company reported a revenue and net profit decline of 7.8% and 12.1% year-on-year for the first half of 2024, leading to a revision of net profit forecasts for 2024-2026 [2][3]. - The company has a strong copper resource base, which is expected to benefit from rising resource prices, justifying a price-to-earnings (PE) ratio of 7x for A-shares and 3.5x for H-shares [2][3]. - The company’s gross margin for the infrastructure segment improved slightly, while overseas business showed steady growth despite domestic challenges [3][4]. Revenue and Profitability - In the first half of 2024, the company achieved revenue of RMB 543.3 billion and a net profit of RMB 14.3 billion, reflecting a decline of 7.8% and 12.1% year-on-year respectively [2][3]. - The gross margin for the infrastructure segment was reported at 9.0%, with a slight year-on-year decrease of 0.03 percentage points [3]. - The company’s operating cash flow showed a significant outflow of RMB 69.3 billion, indicating a decline in cash flow performance [4]. Business Segments - The infrastructure segment generated revenue of RMB 473 billion, down 6.76% year-on-year, with a gross margin of 7.9% [3]. - Emerging business orders grew rapidly, with a year-on-year increase of 32.1% in new contracts, primarily driven by water conservancy and clean energy projects [5][6]. Financial Forecasts - The company’s revenue is projected to decline slightly in 2024 to RMB 1,234.1 billion, with a net profit forecast of RMB 31.6 billion [6][16]. - The earnings per share (EPS) for 2024 is estimated at RMB 1.28, with a PE ratio of 4.51 [6][16]. - The company’s return on equity (ROE) is expected to decrease to 9.14% in 2024 [6][16].