HTSC·2026-03-31 13:35Investment Rating - The investment rating for the company is "Buy" for both A and H shares [7] Core Views - The company reported a revenue of 1,029.784 billion RMB for 2025, a year-on-year decrease of 3.50%, and a net profit attributable to shareholders of 18.363 billion RMB, down 17.34% year-on-year [1] - The company is shifting towards high-quality development, focusing on asset consolidation, cost optimization, and improving operational quality, which is beginning to show results [1] - The real estate business continues to be a drag, while international operations have shown significant improvement, with overseas new contracts signed amounting to 363.3 billion RMB, a year-on-year increase of 16.46% [2] Summary by Sections Financial Performance - In 2025, the company achieved revenues of 9,067 billion RMB in engineering contracting, 169 billion RMB in design consulting, 244 billion RMB in industrial manufacturing, 666 billion RMB in real estate development, and 746 billion RMB in material logistics, with only industrial manufacturing showing growth [2] - The overall gross margin decreased to 9.72%, down 0.55 percentage points year-on-year, with the real estate sector experiencing a decline in gross margin [2] Cash Flow and Expenses - The operating cash flow for the year was 2.957 billion RMB, indicating a positive turnaround, although collection pressures remain [3] - The company’s expense ratio for the year was 5.94%, slightly up by 0.05 percentage points year-on-year, with total expenses decreasing by 2.7% [3] Dividend and Future Plans - The company plans to distribute a cash dividend of 3 RMB per share for 2025, with a dividend payout ratio of 25.5%, resulting in an estimated dividend yield of approximately 4.3% for A shares [4] - For 2026, the company aims for a new contract target of 30,000 billion RMB and revenue of 10,016 billion RMB, while controlling costs and taxes at 9,720 billion RMB [4] Profit Forecast and Valuation - The adjusted net profit forecast for 2026-2028 is 17.3 billion RMB, 17.2 billion RMB, and 17.6 billion RMB respectively, with corresponding EPS of 1.27, 1.26, and 1.29 RMB [5] - The target price for A shares is set at 8.89 RMB and for H shares at 6.47 HKD, based on a valuation of 7x and 4.5x PE for 2026 [5]