Core Viewpoint - Shanghai Industrial Holdings (00363) maintains a high dividend payout ratio of 36.4% and an attractive dividend yield of 8% in 2024, despite a challenging macroeconomic environment, demonstrating a commitment to shareholder returns [1][10] Financial Performance - The company reported a revenue of HKD 28.918 billion, gross profit of HKD 7.9 billion, and net profit attributable to shareholders of HKD 2.808 billion for 2024, with gross and net profit margins of 27.32% and 9.71% respectively [1] - Earnings per share (EPS) stood at HKD 2.582, with a final dividend of HKD 0.52 per share and an annual dividend of HKD 0.94 per share [1] Business Segments - The company operates in four main sectors: infrastructure and environmental protection, real estate, consumer goods, and health, leveraging strong cash flow capabilities to enhance shareholder returns [1][10] - Infrastructure and environmental protection generated revenue of HKD 10.263 billion, maintaining stability with a revenue share increase of 3.7 percentage points to 35.5% [2] - Real estate revenue was HKD 15.152 billion, experiencing a decline in revenue share to 52.4% due to industry challenges, while consumer goods revenue grew by 9.4% to HKD 3.503 billion, increasing its revenue share by 2.3 percentage points to 12.1% [2] Profit Structure - The infrastructure and environmental protection segment contributed HKD 26.3 billion to net profit, with a compound annual growth rate (CAGR) of 16.9% over the past three years, accounting for 85% of total profit [3] - The consumer goods segment saw a profit of HKD 6.43 billion, growing by 71.5% with a CAGR of 44% over three years, contributing 20.8% to total profit [3] Cash Flow and Financial Stability - The company reported a net profit margin of 9.7% for 2024, with cash and cash equivalents exceeding HKD 20 billion, and total bank deposits reaching HKD 28.514 billion [6] - Capital expenditures are being approached cautiously, with signed capital commitments of HKD 3.338 billion, a decrease of HKD 4.882 billion compared to the previous year [6] Strategic Focus - The company is focusing on long-term growth in the infrastructure and environmental sectors, particularly in water treatment and waste management, aligning with dual carbon policies and energy transition opportunities [7][8] - The health sector is also a strategic focus, with the potential for significant growth driven by national health policies [9] Investment Appeal - The company has a strong track record of dividends, with a total of 53 distributions since 2000, amounting to HKD 21.382 billion, which is 1.67 times its market value [13] - The current price-to-book (PB) ratio is 0.27 and the price-to-earnings (PE) ratio is 4, indicating significant undervaluation compared to industry peers [13]

Investment Rating - The report assigns a "Buy" rating for the company, indicating an expected relative performance increase of over 15% compared to the benchmark index within the next 6 to 12 months [4][62]. Core Insights - The company, Shandong Road and Bridge, has a long history and a national presence, having been established in 1948 and listed in 2012. It has a strategic focus on both domestic and international markets, particularly in infrastructure projects [4][7]. - The company is backed by state-owned assets from Shandong, with a concentrated shareholding structure, where the largest shareholder holds 55.68% of the shares [10]. - The company has shown steady business progress, with a continuous increase in contract scale. In the first half of 2024, the company signed new contracts worth 746.6 billion yuan, a year-on-year increase of 11.7% [5][21]. - Revenue has been maintained with a total of 426.8 billion yuan in the first three quarters of 2024, despite a year-on-year decline of 6.3%. The net profit attributable to shareholders was 14.6 billion yuan, reflecting a 3.5% increase year-on-year [5][30]. - The company is expected to benefit from policies aimed at stabilizing the economy and resolving local debts, which may enhance its ability to meet market demand in the future [5][54]. Summary by Sections Company Overview - Shandong Road and Bridge was established in 1948 and has evolved into a leading player in infrastructure construction, with a focus on both domestic and international projects [4][7]. - The company has received numerous national and international awards and holds over 2,000 patents, with an annual construction capacity of 50 billion yuan [7]. Business Performance - The company's main revenue source is road and bridge engineering construction, which accounted for 89% of total revenue in the first half of 2024, amounting to 253.7 billion yuan [5][21]. - The company has a diverse portfolio, including road maintenance, concrete production, equipment leasing, and engineering consulting, with significant experience in various construction management fields [5][21]. Financial Performance - The company has shown a stable financial performance, with a net profit margin of 4.2% and a return on equity (ROE) of 6.2% in the first three quarters of 2024 [5][30]. - The company’s asset-liability ratio was 77.25%, a slight decrease from the previous year, indicating stable debt management [5][44]. Profit Forecast - The company is projected to achieve net profits of 2.46 billion, 2.62 billion, and 2.75 billion yuan for the years 2024 to 2026, respectively, with corresponding price-to-earnings (P/E) ratios of 3.6, 3.4, and 3.3 [5][54]. Investment Recommendation - Given the company's strong order book and favorable market conditions, it is recommended as a "Buy" with expectations of significant growth in the coming years [5][54].