Investment Rating - The industry investment rating is "Positive" and maintained [9] Core Viewpoints - Infrastructure investment has been declining, with expectations for increased fiscal support in the future [6][12] - From January to August, narrow infrastructure investment increased by 2.0% year-on-year, while broad infrastructure investment increased by 5.9% year-on-year [2][12] - In August alone, narrow infrastructure investment decreased by 5.8% year-on-year, and broad infrastructure investment decreased by 3.2% year-on-year, with a month-on-month decline of 1.8 percentage points [2][6] Summary by Sections Economic Data - The National Bureau of Statistics reported that from January to August, narrow infrastructure investment totaled 12 trillion yuan, with a year-on-year increase of 2.0%, and broad infrastructure investment totaled 16.3 trillion yuan, with a year-on-year increase of 5.9% [12] - In August, narrow infrastructure investment was 1.5 trillion yuan, showing a year-on-year decrease of 5.8%, while broad infrastructure investment was 2.1 trillion yuan, reflecting a year-on-year decrease of 3.2% [12] Investment Breakdown - In August, only electricity investment showed year-on-year growth, while investments in other sectors declined [12] - Transportation investment decreased by 5.4% in August, with railway investment down by 6.6% and road investment down by 11.6% [12] - Water conservancy investment saw a significant decline of 14.8%, with water management investment down by 29.8% [12] Cement Production - Cement production has been declining, with a year-on-year decrease of 4.8% from January to August, and a decrease of 6.2% in August alone [12] - The data indicates that construction activities may have slowed down due to seasonal factors [12] Fixed Asset Investment - Fixed asset investment growth has declined for two consecutive months, with attention on the physical workload progress in September and potential fiscal increases [12] - As of September 12, 2023, a total of 3.4138 trillion yuan in bonds has been issued this year, which is 655.2 billion yuan more than the previous year [12]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative return of over 20% within the next six months [6][17]. Core Views - The company's Q1 performance continues to face pressure, with a slight revenue increase of 1.61% year-on-year to CNY 142.56 billion, while net profit decreased by 12.03% to CNY 2.636 billion. The expectation is for gradual improvement in operations due to anticipated fiscal policy support [1][2]. - The report highlights the potential benefits for the company from major hydropower projects, as it is a leading player in the water conservancy and hydropower sector, responsible for over 80% of river planning and more than 65% of the construction of medium and large hydropower stations in China [3][1]. Financial Performance Summary - In Q1 2025, the company reported a gross margin of 10.81%, a decrease of 0.98 percentage points year-on-year. The net profit margin was 2.46%, down by 0.4 percentage points [2]. - The company signed new contracts worth CNY 299.32 billion in Q1 2025, a decrease of 9.6% year-on-year. Notably, new contracts in hydropower and wind power increased by 20.2% and 67.3% respectively, indicating strong demand in these sectors [3]. - The company's operating cash flow showed a net outflow of CNY 40.519 billion in Q1 2025, which is an increase in outflow by CNY 1.516 billion compared to the same period last year [2]. Financial Data and Valuation - The projected revenue for the company is expected to grow from CNY 609.41 billion in 2023 to CNY 738.51 billion by 2027, with a compound annual growth rate of approximately 6.87% [5]. - The estimated net profit attributable to the parent company is projected to increase from CNY 12.99 billion in 2023 to CNY 15.66 billion by 2027, reflecting a growth rate of 11.76% [5]. - The company's price-to-earnings (P/E) ratio is projected to decrease from 6.43 in 2023 to 5.34 by 2027, indicating potential undervaluation [5].