CNCEC(SH:601117) GOLDEN SUN SECURITIES·2025-04-27 06:12Investment Rating - The investment rating for the company is "Buy" [5] Core Views - The company's valuation is at a historical low with a price-to-book (PB) ratio of 0.75, indicating a strong margin of safety. The company has a low interest-bearing debt ratio of 6.3%, the lowest among major state-owned construction enterprises, and has significant cash assets of 39.7 billion yuan, leading to a net cash position of 25.6 billion yuan after deducting debt [1][12] - The company's cash flow has been consistently positive since its listing, with a total of 13.9 billion yuan in net operating and investment cash flow over the past five years. This positions the company favorably compared to peers like China Steel International and China National Materials, which also have positive free cash flow and low debt ratios [1][12] - The company's dividend payout ratio currently stands at 20%, with potential for significant increases in the future, especially when compared to the average 43% payout ratio of similar companies [1][12] Summary by Sections Project Developments - The company's caprolactam project is progressing well, benefiting from accelerated import substitution and declining raw material prices. The project is expected to improve profitability significantly as domestic prices for related products rise due to reduced imports from the U.S. [2][18] - The cost of key raw materials has decreased, with butadiene prices dropping by 22.5% since the beginning of the year, which is expected to enhance the project's profit margins [2][18] Construction Business - The domestic construction sector is expected to benefit from accelerated investment in coal chemical projects, particularly in Xinjiang, which is crucial for national energy security. The company is well-positioned to capture a significant share of this market [3][27] - The company is projected to secure substantial orders from coal chemical investments, with estimates of 39.1 billion yuan and 73.6 billion yuan in orders for 2025 and 2026, respectively [3][27] Financial Projections - The company is expected to achieve net profits of 5.7 billion yuan, 6.3 billion yuan, and 7.2 billion yuan for 2024, 2025, and 2026, respectively, with corresponding year-on-year growth rates of 5.8%, 9.8%, and 13.8% [4][31] - The current stock price corresponds to price-to-earnings (PE) ratios of 7.9, 7.2, and 6.3 for the years 2024, 2025, and 2026, indicating attractive valuation levels [4][31]