MCC(SH:601618) HTSC·2025-03-30 11:51Investment Rating - The report maintains a "Buy" rating for the company's A/H shares, with target prices set at HKD 2.26 and RMB 4.17 respectively [7][8]. Core Views - The company reported a revenue of RMB 552 billion for 2024, a decrease of 12.9% year-on-year, with a net profit attributable to shareholders of RMB 67.5 billion, down 22.2% year-on-year. The fourth quarter saw a revenue of RMB 139.4 billion, a decline of 16.29% year-on-year [1][2]. - The company has signed new contracts worth RMB 1.25 trillion in 2024, a decrease of 12.4% year-on-year, but overseas contracts increased by 46.9% to RMB 93.1 billion. The report suggests that the company is well-positioned to benefit from overseas expansion and policy support for debt resolution and stable growth [1][4]. Summary by Sections Financial Performance - The company's overall gross margin for 2024 was 9.69%, unchanged from the previous year, with a fourth-quarter gross margin of 11.6%, an increase of 0.60 percentage points year-on-year. The core engineering contracting business generated RMB 5,015 billion in revenue, down 14.4% year-on-year, accounting for 90.8% of total revenue [2][3]. - The company recorded a significant increase in impairment provisions, totaling RMB 9.7 billion, up 7.9 billion year-on-year, which has impacted net profit margins [3]. Cash Flow and Debt Management - The operating cash flow for 2024 was RMB 7.8 billion, an increase of RMB 2 billion year-on-year, with a collection/payment ratio of 77.7%/74.7%, reflecting improved cash flow management [3]. - The report highlights that the company has effectively utilized debt resolution opportunities, leading to a significant increase in cash collection rates [3]. Profit Forecast and Valuation - The revenue target for 2025 is set at RMB 564 billion, indicating a growth expectation of 2.2%. The report adjusts the net profit forecast for 2025 to RMB 7.2 billion, reflecting an increase of 13.8% from previous estimates [4][6]. - The report assigns a price-to-earnings ratio (P/E) of 12x for A shares and 6x for H shares for 2025, suggesting a favorable valuation compared to peers [4][12].