CHINA STATE CON(HK:03311) Changjiang Securities·2025-08-25 04:42Investment Rating - The investment rating for China State Construction International (3311.HK) is "Buy" and is maintained [9]. Core Views - The company reported a revenue of RMB 56.64 billion for H1 2025, a year-on-year increase of 0.1%, and a net profit attributable to shareholders of RMB 5.26 billion, up 5.1% year-on-year [2][6]. - The slow recognition of investment income has negatively impacted performance, while technology-driven revenue growth is notable [9]. - The company aims to maintain a double-digit performance guidance for 2025, with a projected dividend yield of approximately 5.7% based on a 33% payout ratio [9]. Summary by Sections Financial Performance - In H1 2025, revenue was RMB 56.64 billion, with a 0.1% increase year-on-year; net profit was RMB 5.26 billion, reflecting a 5.1% growth [2][6]. - For Q2 2025, revenue was RMB 33.75 billion, down 2.1% year-on-year, with technology-driven revenue at RMB 15.66 billion, up 99.7%, while investment-driven revenue fell 39.6% to RMB 9.43 billion [9]. Business Segments - Technology-driven revenue reached RMB 20.54 billion in H1 2025, a significant increase of 73.4%, while investment-driven revenue was RMB 20.79 billion, down 21.5% [9]. - New contracts signed in H1 2025 totaled RMB 92.6 billion, a decline of 26.0%, but adjusted for a large order from 2024, the growth was 22.8% [9]. Regional Performance - The gross margin for the mainland region improved to 22.8%, up 2.5 percentage points year-on-year, while Hong Kong's gross margin decreased to 5.2%, down 1.9 percentage points [9]. - The company reported a cash net outflow of RMB 336 million from mainland operations, an improvement from a RMB 1.33 billion outflow the previous year, while cash inflow from Hong Kong operations was RMB 459 million, up RMB 254 million year-on-year [9]. Strategic Developments - The company is expanding its MiC (Modular Integrated Construction) business in mainland cities, achieving full coverage in first-tier cities [9]. - The Hong Kong government has increased its projected annual infrastructure spending from approximately HKD 90 billion to HKD 120 billion, providing further funding assurance for large-scale projects [9].