GF SECURITIES·2024-04-30 06:32Investment Rating - The report assigns a "Buy - A / Buy - H" rating to China Railway Construction Corporation (CRCC) (601186 SH / 01186 HK) [1] Core Views - CRCC reported Q1 2024 revenue of RMB 2749 49 billion, a YoY increase of 0 52% Net profit attributable to shareholders was RMB 60 25 billion, up 1 98% YoY, and non-GAAP net profit was RMB 57 77 billion, up 1 99% YoY [1] - Operating cash flow saw a net outflow increase to RMB 466 billion in Q1 2024, compared to RMB 392 billion in Q1 2023, while investment cash flow net outflow decreased to RMB 137 billion, the lowest in four years [1] - New contracts signed in Q1 2024 totaled RMB 5506 90 billion, up 2 05% YoY Overseas contracts grew significantly by 11 85% YoY to RMB 339 46 billion, driven by the "Overseas First" strategy [2] - Green environmental protection orders showed strong growth, increasing by 36 70% YoY to RMB 276 80 billion, while real estate development orders declined by 31 85% YoY [2] - The company appointed a new chairman, Dai Hegen, who previously led China National Chemical Engineering Co Ltd to rapid growth, with expectations of further management optimization [2] - The report maintains a target price of RMB 10 53 for A-shares and HKD 5 94 for H-shares, based on a 5x PE valuation for 2024, and forecasts net profits of RMB 28 6 billion, RMB 31 4 billion, and RMB 34 7 billion for 2024-2026 [2] Financial Performance and Projections - Revenue is projected to grow from RMB 1 137993 trillion in 2023 to RMB 1 328564 trillion in 2026, with a CAGR of 5 1%-5 4% [4] - Net profit attributable to shareholders is expected to increase from RMB 26 097 billion in 2023 to RMB 34 714 billion in 2026, with a CAGR of 9 6%-10 4% [4] - EBITDA is forecasted to rise from RMB 78 198 billion in 2023 to RMB 82 263 billion in 2026, with a slight dip in 2024 to RMB 72 782 billion [4] - EPS is projected to grow from RMB 1 92 in 2023 to RMB 2 56 in 2026, with a P/E ratio declining from 3 96x in 2023 to 3 37x in 2026 [4] - ROE is expected to remain stable, ranging from 8 4% to 8 6% over the forecast period [4] Business Segments and Strategy - Engineering contracting remains the largest segment, with orders of RMB 4101 12 billion in Q1 2024, up 3 12% YoY [2] - The "Overseas First" strategy is driving international expansion, with overseas orders growing faster than domestic orders [2] - Green environmental protection and investment operations are emerging as high-growth areas, with order increases of 36 70% and 6 65% YoY, respectively [2]