STEC(600820) Tianfeng Securities·2024-11-01 01:00Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for the stock with expected returns exceeding 20% over the next six months [4][6]. Core Views - The company experienced a slight decline in revenue and profit in the short term, but its long-term growth potential remains promising [1][4]. - The company has shown significant improvement in cash flow, with a notable increase in operating cash flow in Q3 [3][4]. Financial Performance Summary - For the first three quarters of 2024, the company reported revenue of 42.888 billion, a year-on-year decrease of 8.57%, while net profit attributable to the parent company was 1.499 billion, a slight increase of 0.35% [1]. - The gross margin for the first three quarters was 11.65%, down by 0.22 percentage points year-on-year, with Q3 gross margin at 5.43%, down by 6.59 percentage points [3]. - The company signed new contracts worth 65.705 billion in the first three quarters, reflecting a year-on-year increase of 9.46%, with Q3 contracts at 19.579 billion, up by 10.35% [2]. Earnings Forecast - The earnings forecast for the company has been slightly adjusted, with expected net profits of 3 billion, 3.3 billion, and 3.7 billion for 2024, 2025, and 2026 respectively [4][5]. - The projected P/E ratios for the next three years are 7.1, 6.45, and 5.8, indicating a low valuation relative to earnings [4][5]. Cash Flow Analysis - The company reported a significant improvement in cash flow, with Q3 operating cash inflow of 6.16 billion, an increase of 5.27 billion year-on-year [3][9]. - The cash flow from operations for the first three quarters was 2.392 billion, reflecting a year-on-year outflow increase of 2.025 billion [3][9]. Order Growth and Business Development - The company has seen steady growth in new orders, particularly in municipal and road engineering sectors, with significant increases in contract values [2]. - The digital business segment is progressing well, with new contracts amounting to 450 million, indicating a positive trend in this area [2]. Valuation Metrics - The company’s total market capitalization is approximately 21.537 billion, with a current price of 6.85 per share [6]. - The book value per share is reported at 9.41, with a debt-to-asset ratio of 76.96% [6].