建筑工程行业周报：行业压力已现，期待政策变化

Investment Rating - The report maintains an "Outperform the Market" rating for several major state-owned construction enterprises, including China State Construction, China Chemical, China Electric Power Construction, China Railway, China Communications Construction, and China Railway Construction [5][6][7]. Core Insights - The construction industry is under pressure, with a significant decline in revenue growth, dropping by 10.06 percentage points to -3.58% in H1 2024. Q2 alone saw a revenue decrease of -7.82% [4][5]. - Cash flow from operating activities in the construction sector showed a net outflow of 511.63 billion yuan, an increase of 120% year-on-year [4]. - The average capital advance ratio for the eight major state-owned construction enterprises reached a historical high, increasing by 1.57 percentage points compared to 2014 [4]. - A proposed economic stimulus plan of no less than 10 trillion yuan over the next two years aims to revitalize the economy through a combination of fiscal policy and structural reforms [3]. Summary by Sections Investment Strategy - The report suggests focusing on state-owned enterprises with low valuations, such as China State Construction, China Chemical, and China Electric Power Construction. It also highlights companies with overseas expansion and high dividend yields, such as China National Materials and Northern International [5][6][7]. Market Performance - The construction engineering index rose by 1.91% in the week of September 16-20, 2024, while the Shanghai Composite Index increased by 1.21%. Year-to-date, the construction index has decreased by 16.48%, ranking 11th out of 29 industries [10][15]. - All sub-sectors within the construction industry experienced gains, with the residential construction sector showing the highest increase of 2.66% [10][15]. Company-Specific Insights - China Railway is projected to achieve net profits of 37.82 billion yuan, 42.37 billion yuan, and 46.20 billion yuan for 2024-2026, with respective growth rates of 13.0%, 12.0%, and 9.0% [6]. - China Metallurgical Group is expected to have EPS of 0.48 yuan and 0.53 yuan for 2024 and 2025, respectively, with a valuation range of 4.33-4.81 yuan [6]. - China Communications Construction is anticipated to have EPS of 1.62 yuan and 1.75 yuan for 2024 and 2025, with a valuation range of 12.96-14.58 yuan [6]. - China Railway Construction is expected to benefit from stable infrastructure growth, with projected EPS of 2.14 yuan and 2.27 yuan for 2024 and 2025 [6].