CNECC(SH:601611) HTSC·2025-04-30 06:19Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 10.81 [8][9]. Core Views - The company reported revenues and net profits for 2024 of RMB 113.54 billion and RMB 2.06 billion, respectively, reflecting a year-on-year increase of 3.8% and 0.1% [1][2]. - The approval of 10 new nuclear power units in April 2025 is expected to sustain high investment levels in the nuclear sector, benefiting the company as a key player in nuclear engineering construction [1][4]. - The company’s nuclear engineering revenue increased by 34.6% year-on-year, contributing to a revenue share of 29% [2][4]. Summary by Sections Financial Performance - In 2024, the company’s nuclear engineering and industrial construction revenues were RMB 322.1 billion and RMB 693.2 billion, respectively, with the nuclear segment growing significantly [2]. - The gross margin for nuclear engineering was reported at 13.7%, with a slight year-on-year increase in Q4 [2]. - The company signed new contracts worth RMB 1,634.4 billion in 2024, indicating strong future growth potential [2]. Research and Development - The R&D expense ratio increased slightly to 2.83% in 2024, reflecting the company's commitment to enhancing capabilities in key construction areas like nuclear power [3]. Market Outlook - The approval of additional nuclear projects is expected to further stimulate investment in the nuclear sector, with a reported 48.8% year-on-year increase in nuclear investment in early 2025 [4]. - The company has secured 14 new nuclear construction projects in 2024, with a total of 32 units under construction by the end of the year [4]. Profit Forecast and Valuation - The forecasted net profits for 2025-2027 are RMB 2.35 billion, RMB 2.82 billion, and RMB 3.24 billion, respectively, with a downward adjustment of 8% and 7% for 2025 and 2026 due to expected declines in civil construction orders [5]. - The company is valued using a segmented approach, with nuclear engineering assigned a PE ratio of 15.4x and civil construction at 5.0x for 2025 [5].