CSCEC(601668)2024-10-28 03:23Investment Rating - The report maintains an "Accumulate" rating for the company [2]. Core Views - The company reported a decline in performance due to a sluggish construction market, with a year-on-year revenue drop of 2.7% to CNY 1.63 trillion and a net profit decrease of 9.1% to CNY 397.03 billion in the first three quarters of 2024 [1][3]. - The company is expected to benefit from government policies aimed at resolving local government debt and stabilizing the real estate market, which may gradually restore demand for construction and infrastructure [2][3]. - The company is actively managing cash flow and pursuing a transformation towards high-end, intelligent, and green production, while also focusing on recovering funds from overdue projects [2][3]. Financial Performance Summary - For the first three quarters of 2024, the company achieved a revenue of CNY 1.63 trillion, down 2.7% year-on-year, and a net profit of CNY 397.03 billion, down 9.1% year-on-year [1]. - The gross margin and net margin for the first three quarters were 8.83% and 3.21%, respectively, showing slight declines compared to the previous year [1]. - The company’s cash flow faced pressure, with a net cash outflow of CNY 770 billion in the first three quarters, although there was a positive cash inflow of CNY 318 billion in Q3 [1]. Business Structure Analysis - The company’s revenue from construction business was CNY 1.04 trillion, down 3.3% year-on-year, while infrastructure business revenue was CNY 384.5 billion, down 1.3% year-on-year [1]. - New contracts signed in the first nine months reached CNY 2.99 trillion, an increase of 7.9% year-on-year, with significant growth in overseas orders and specific sectors like energy and industrial projects [1][2]. Earnings Forecast - The earnings forecast for the company has been adjusted, with expected net profits of CNY 510 billion, CNY 543 billion, and CNY 565 billion for 2024, 2025, and 2026, respectively [3]. - The projected dividend yield for 2024-2026 is approximately 4.1%, 4.3%, and 4.5%, indicating a favorable valuation despite the current low price levels [3].