建筑行业周报：Q3建筑板块经营承压，央企现金流环比改善，看好Q4央企基本面好转

Investment Rating - The report maintains an "Outperform" rating for the construction sector, highlighting the potential for improvement in the performance of state-owned enterprises (SOEs) in Q4 [7]. Core Insights - The construction industry faced operational pressure in Q3 2024, with a year-on-year revenue decline of 4.88% to 6.20 trillion yuan, and a net profit drop of 11.70% to 137.82 billion yuan. The decline is attributed to slowed investment and weak downstream demand [1][13]. - Despite the overall decline, major state-owned enterprises showed a smaller revenue decrease of 3.65% to 5.01 trillion yuan, and a net profit decline of 9.85% [1][13]. - Q4 is expected to be a traditional peak season for construction companies, with anticipated improvements in cash flow and revenue due to ongoing policy support and infrastructure investments [15]. Summary by Sections Industry Dynamics - The construction sector's revenue and profit have been under pressure, with Q1, Q2, and Q3 showing respective revenue growth rates of 1.23%, -7.27%, and -8.11% [1][13]. - The decline in net profit is primarily due to revenue drops, increased expense ratios, and asset impairment losses [1][13]. Company Performance - Specific companies like China Electric Power, China Chemical, and China Energy Construction reported positive revenue growth of 2.34%, 1.17%, and 3.44% respectively [2][14]. - China Metallurgical Group and China Energy Construction achieved double-digit net profit growth rates of 30.36% and 17.28% respectively [2][14]. - In Q3, China Metallurgical Group saw a significant revenue increase of 15.24% [2][14]. Market Performance - The construction industry index rose by 1.40% from October 28 to November 1, outperforming major indices like the Shenzhen Composite Index and the CSI 300 [16]. - The report identifies several stocks with strong performance, including Zhonghua Rock and Baoying Co., which saw increases of 61.25% and 53.73% respectively [16][17]. Valuation Metrics - As of November 1, the construction sector's price-to-earnings (P/E) ratio was 10.34, with a price-to-book (P/B) ratio of 0.85, indicating a relative valuation position among other sectors [19]. - The lowest P/E ratios were noted for China Construction (5.09) and Shaanxi Construction (4.66) [19]. Key Recommendations - The report suggests focusing on undervalued construction SOEs such as China Construction, China Communications Construction, and China Railway Construction, anticipating improvements in their operational metrics and valuation [9][8]. - It also highlights the potential for growth in international projects and the benefits of ongoing state-owned enterprise reforms [9][8].