CSCEC(601668) 国盛证券·2024-10-26 12:23Investment Rating - The report maintains a "Buy" rating for China State Construction Engineering Corporation (601668 SH) [1][3] Core Views - Q3 revenue and performance were under pressure due to construction slowdown but Q4 is expected to see marginal recovery driven by policy support [1] - Operating cash flow improved significantly in Q3 with a net inflow of 31 8 billion yuan a year-on-year increase of 37 6 billion yuan [1] - The company's real estate business revenue accelerated notably in Q3 with a 31% year-on-year growth [1] - The parent company plans to increase its shareholding by 0 22%-0 45% of total shares demonstrating confidence in the company's future development [1] Business Performance - Total revenue for Q1-3 2024 was 1 6265 trillion yuan a year-on-year decrease of 2 7% while net profit attributable to shareholders was 39 7 billion yuan down 9 0% [1] - Q3 revenue was 481 9 billion yuan a year-on-year decrease of 13 6% and net profit attributable to shareholders was 10 3 billion yuan down 30% [1] - Domestic revenue for Q1-3 was 1 542 trillion yuan down 3 2% while overseas revenue was 84 5 billion yuan up 8 9% [1] Business Segments - Construction business revenue for Q1-3 was 1 044 trillion yuan down 3% with industrial factory new contract value increasing 26 4% to 520 8 billion yuan [1] - Infrastructure business revenue for Q1-3 was 384 5 billion yuan down 1% with new contracts increasing 26% year-on-year [1] - Real estate business revenue for Q1-3 was 176 billion yuan up 2% with Q3 revenue increasing 31% year-on-year [1] Financial Metrics - Gross margin for Q1-3 was 8 8% down 0 1 percentage point year-on-year [1] - The expense ratio for Q1-3 was 4 16% down 0 04 percentage point year-on-year but Q3 expense ratio increased by 0 4 percentage point [1] - Net profit margin attributable to shareholders decreased by 0 17 percentage points to 2 4% [1] Valuation and Forecast - The company's 2024-2026 net profit attributable to shareholders is forecasted to be 50 2/51 1/51 7 billion yuan with EPS of 1 21/1 23/1 24 yuan per share [1] - The current PE ratio is 5 2/5 1/5 1 times for 2024-2026 [1] Shareholder Returns - The company plans to maintain a stable profit distribution policy and increase cash dividends with the goal of achieving year-on-year growth in dividends per share [1]