CHINA STATE CON(03311) 广发证券·2024-05-16 05:32Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 12.31 per share, based on a 6x PE for 2024 [2][3]. Core Insights - The company is a leading player in the Hong Kong and Macau construction industry, with rapid growth in performance. From 2019 to 2023, revenue increased from HKD 61.8 billion to HKD 113.7 billion, representing a CAGR of +16.5%, while net profit rose from HKD 5.41 billion to HKD 9.16 billion, with a CAGR of +14.1% [2][3]. - The company's strong market position in Hong Kong and Macau is driven by the deep integration of the Guangdong-Hong Kong-Macau Greater Bay Area. In Hong Kong, revenue grew from HKD 21.4 billion in 2019 to HKD 30.8 billion in 2023, with a CAGR of +10%, while in Macau, revenue surged from HKD 4.7 billion to HKD 10.8 billion, achieving a CAGR of +23% [3][4]. - The company's mainland operations are driven by technology and investment, with a significant improvement in cash flow. The return on equity (ROE) increased from 11.8% in 2018 to 13.9% in 2022, and technology-driven orders accounted for 32.1% of new contracts in 2022, growing by 70.6% year-on-year [3][4]. Summary by Sections Section 1: Company Overview - The company, established in 1979 and listed in 2005, operates a comprehensive business model covering technology, investment, construction, and asset management. It is one of the largest general contractors in Hong Kong and a leading urban investment operator in mainland China [10][11]. Section 2: Business Performance - The company's core business includes infrastructure investment and construction, with significant contributions from prefabricated construction and curtain wall engineering. In 2023, infrastructure investment accounted for 55.9% of revenue, while construction engineering contributed 35.4% [18][19]. Section 3: Financial Performance - The company achieved a revenue of HKD 113.7 billion in 2023, reflecting an 11.4% year-on-year increase. The net profit for the same year was HKD 9.16 billion, up 15.2% year-on-year. The CAGR for revenue and net profit from 2019 to 2023 was +16.5% and +14.1%, respectively [23][24]. Section 4: Future Outlook - The company expects net profits for 2024, 2025, and 2026 to be HKD 10.3 billion, HKD 11.7 billion, and HKD 13.5 billion, respectively, with year-on-year growth rates of +12.8%, +13.5%, and +14.9% [3][4].