建筑工程行业周报：Q2行业加速下行，现金流明显恶化

Industry Overview - The construction industry's revenue growth rate in H1 2024 decreased by 10.06 percentage points to -3.58%, with overseas orders continuing to show positive momentum [2] - In Q2 2024, the construction industry's revenue growth rate was -7.82%, a decline of 13.89 percentage points compared to the same period last year, primarily due to slowing infrastructure investment and slower issuance of special bonds [2] - The gross profit margin of the construction industry in H1 2024 increased by 0.19 percentage points to 10.21%, while the net profit margin attributable to the parent company decreased by 0.20 percentage points to 2.31% [2] - The net cash outflow from operating activities in H1 2024 increased by 120% year-on-year, reaching 511.628 billion yuan, with a significant increase in cash outflow in Q2 2024 [2] Sector Performance - The construction engineering index fell by 2.93% during the week of August 26-30, 2024, while the Shanghai Composite Index fell by 0.43% [3][8] - Year-to-date, the construction index has fallen by 11.21%, ranking 11th out of 29 industries, with the Shanghai Composite Index down by 4.46% [3][8] - The engineering consulting sector saw the largest weekly increase of 7.17%, followed by petroleum engineering, steel structure, decoration, and chemical engineering sectors [3][8] - The valuation of the construction industry is at a historically low level, with a current price-to-earnings ratio of 6.50 times, significantly lower than the overall A-share market's 12.94 times [12] Investment Strategy - The report recommends focusing on undervalued central state-owned enterprises (SOEs) such as China State Construction, China Chemical, and China Railway Construction, which are expected to benefit from the inclusion of market value in SOE performance evaluations [3][4] - Overseas and high-dividend stocks like Sinoma International, China Railway Group, and China Communications Construction are also highlighted as key investment opportunities [3][4] - Companies related to the low-altitude economy, such as Shenzhen Urban Transport Planning Center and Huashi Group, are identified as potential growth areas [3][4] Company Highlights - China Railway Group is expected to achieve net profits of 37.82 billion yuan, 42.374 billion yuan, and 46.195 billion yuan in 2024-2026, with a resource business contributing 14% of profits [4] - China Metallurgical Group is projected to have EPS of 0.48 yuan and 0.53 yuan in 2024-2025, with a valuation range of 4.33-4.81 yuan [5] - China Communications Construction is expected to achieve EPS of 1.62 yuan and 1.75 yuan in 2024-2025, with a valuation range of 12.96-14.58 yuan [5] - China Railway Construction is forecasted to have EPS of 2.14 yuan and 2.27 yuan in 2024-2025, with a valuation range of 10.70-12.84 yuan [5] - Sinoma International is projected to achieve EPS of 1.27 yuan and 1.41 yuan in 2024-2025, with a valuation range of 12.65-13.92 yuan [5] Stock Performance - The top five gainers in the construction sector for the week were Jianke Co, Hualan Group, Xujie Technology, Shenzhen Ruihe, and Huitong Group, with weekly gains of 21.76%, 19.43%, 18.83%, 13.98%, and 13.71% respectively [11] - The top five decliners were Aoya Co, Tunnel Co, China Power Construction, Tibet Tianlu, and China Metallurgical Group, with weekly losses of 19.58%, 12.84%, 11.28%, 10.43%, and 8.95% respectively [11]