Summary of Zhonggong International's Conference Call Company Overview - **Company**: Zhonggong International - **Industry**: International Engineering Contracting Key Financial Metrics - **Revenue**: 7.126 billion CNY in the first three quarters of 2025 - **Net Profit**: 247 million CNY, showing a year-on-year decline - **New Contracts Signed**: 3.03 billion USD, a 35% increase year-on-year - **Effective Contract Amount**: 1.621 billion USD, a year-on-year increase of 93.90% [2][3][4] Core Insights and Arguments - **International Engineering Performance**: Significant growth in international engineering contracting, particularly in countries like Guyana, Iraq, and Nicaragua, contributing to a robust pipeline of projects [2][4] - **Equipment Manufacturing**: Signed contracts worth 963 million CNY, including multiple overseas cable car projects and domestic ski resort projects [2][4] - **Investment and Operations**: Successful execution of projects in Uzbekistan, including waste-to-energy initiatives and the trial operation of the Tianmen cable car [2][3][4] - **Profitability Factors**: The decline in net profit is attributed to high project execution in the previous year and fluctuations in the RMB exchange rate [3][5] - **Strategic Shift**: The company is shifting its market focus from Latin America to Central Asia and the Middle East, particularly benefiting from oil and gas projects in Iraq [2][6][7] Future Outlook - **Performance Expectations**: Anticipated steady growth for the full year due to the peak execution phase of several key projects and reduced exchange rate losses [4][5] - **Dividends**: Planned cash dividend ratio of no less than 40% from 2024 to 2026 [11] - **Market Management**: Implementation of share buyback plans to enhance company value and shareholder rights [2][11] Additional Important Points - **Risk Management**: The company employs forward foreign exchange contracts and rolling adjustments to mitigate currency risk [6] - **Competitive Advantages**: Zhonggong International's unique advantages include broad market layout, technical expertise, and innovative financing capabilities [8][9] - **Focus on Deep Resource Exploration**: Continued investment in deep resource exploration, particularly in oil and gas projects in Central Asia [9][10] - **New Infrastructure Projects**: Involvement in multiple supercomputing and data center projects, leveraging its design capabilities [11][12] Conclusion Zhonggong International is positioned for steady growth in the international engineering sector, with a strategic focus on Central Asia and a commitment to maintaining strong financial performance through effective project execution and risk management strategies.

Core Viewpoint - The State Administration of Foreign Exchange (SAFE) has introduced a series of nine policies aimed at facilitating foreign exchange settlement for foreign trade enterprises, enhancing the efficiency and convenience of cross-border trade [1] Group 1: Expansion of Pilot Programs - The SAFE has expanded the pilot program for cross-border trade to 11 regions, with a total of approximately $1.7 trillion in transactions processed under the pilot scheme [2] - Companies like Yangtze Optical Fibre and Cable Joint Stock Limited Company anticipate significant cost savings and operational efficiency improvements if included in the pilot, potentially releasing over 100 million yuan annually [2] Group 2: Support for New Trade Models - The rapid growth of cross-border e-commerce has become a crucial support for stabilizing and optimizing foreign trade, with imports and exports reaching approximately 2.06 trillion yuan in the first three quarters of the year, a 6.4% increase [3] - New policies encourage banks to leverage the credibility of cross-border e-commerce platforms to include more small and medium-sized enterprises in the category of quality enterprises [3][5] Group 3: Enhancements in Service Trade - China's service trade has seen rapid growth, ranking second globally, with a total import and export value of $509.1 billion in the first half of 2025, reflecting a 6% year-on-year increase [6] - New regulations allow engineering companies to manage overseas funds more flexibly across different projects and countries, addressing the uneven distribution of funds and reducing external financing needs [7][9] Group 4: Improved Financial Services - The new policies simplify the management of service trade advance payment businesses and clarify the procedures for domestic enterprises to handle payments for transportation, storage, and maintenance directly through banks [9] - The reforms in the foreign exchange sector are expected to create broader development opportunities for various entities to engage in global economic cooperation [9]

Core Viewpoint - The company, China National Machinery Industry Corporation, has made significant strides in overseas engineering contracting and investment operations, focusing on sustainable development and innovative financing methods while facing some revenue fluctuations in the first half of the year [2]. Group 1: Overseas Engineering Contracting - The company has achieved remarkable results in overseas business expansion since the 14th Five-Year Plan, including signing the Iraq Nine Zone Oil and Gas Central Processing Facility project, which set a record for the shortest construction period and achieved 18 million consecutive safe working hours, earning the "Outstanding Contractor" award from the Iraqi Prime Minister [2]. - The company is focusing on industrial construction overseas, signing multiple projects in new markets such as Guyana and Iraq, and establishing a sustainable development model [2]. Group 2: Investment and Operations - The "Engineering Investment and Operation" sector is a key development area for the company during the 14th Five-Year Plan, with a focus on environmental engineering, cableway engineering, and clean energy projects, including two waste-to-energy projects in Uzbekistan with a total investment of approximately $475 million and an expected post-tax internal rate of return of no less than 8% [2]. - The company has successfully passed national inspections for its cableway projects and plans to continue tracking quality opportunities along the Belt and Road Initiative [2]. Group 3: Financing Innovations - The company has a strong asset position with a debt ratio lower than the industry average and has explored diversified financing methods, such as the first RMB sovereign commercial loan project in Uzbekistan and the first RMB sovereign commercial loan project in Latin America [2]. Group 4: Financial Performance - In the first half of the year, the company reported operating revenue of 4.788 billion yuan and a total profit of 226 million yuan, showing a year-on-year decline due to the completion of several projects that were at their execution peak last year [2]. - The company's gross profit margin improved to 18.6%, with a debt ratio of 52.55%, both exceeding industry averages, and net cash flow from operating activities reached 797 million yuan [2]. - As of June 30, 2025, the company signed new contracts totaling $2.139 billion, a year-on-year increase of 33%, with a backlog of contracts amounting to $9.545 billion [2]. Group 5: Equipment Manufacturing - The company has enhanced its international operational capabilities in advanced engineering technology equipment, signing multiple overseas cableway projects and expanding into domestic automated waste steel handling [2]. Group 6: Market Value Management - The company has established a market value management system as part of its long-term strategic management, distributing cash dividends of 155 million yuan to shareholders in 2024, accounting for 42.8% of the annual net profit attributable to the parent company [2]. - Cumulatively, the company has distributed dividends amounting to 3.24 billion yuan since its listing [2]. Group 7: Future Development Goals - Looking ahead to the 15th Five-Year Plan, the company aims to become a technology-driven professional engineering firm, focusing on enhancing the value of the entire engineering industry chain and core competitiveness while serving national strategic initiatives [2].

Group 1: Overseas Engineering Expansion - The company has achieved significant results in expanding overseas engineering contracting, particularly in the oil and gas sector, with a record of 1,800 million safe working hours in Iraq [4] - New projects in industrial construction have been signed in Kazakhstan and Turkey, contributing to local industrial upgrades [4] - The company has successfully entered new markets in Guyana, Iraq, and Nicaragua, establishing a sustainable market development model [4] Group 2: Investment and Operation Breakthroughs - The company focuses on environmental engineering, cableway engineering, and clean energy projects, with a total investment of approximately $475 million in two waste-to-energy projects in Uzbekistan [5][6] - The company’s sewage treatment capacity has increased to 280,000 tons per day, positioning it within the medium scale of the industry [6] Group 3: Financing Innovations - The company maintains a low asset-liability ratio below the industry average and has diversified financing channels, including the first RMB sovereign commercial loan project in Uzbekistan [7] - The financing model for the Kazakhstan soda plant project is the largest in Central Asia, utilizing a mixed loan approach [7] Group 4: Financial Performance - In the first half of the year, the company reported revenue of 4.788 billion yuan and a profit of 226 million yuan, with a gross margin of 18.6% [8] - The company signed new contracts worth $2.139 billion, a year-on-year increase of 33%, with a backlog of contracts amounting to $9.545 billion [9] Group 5: Equipment Manufacturing Development - The company has enhanced its international operational capabilities in advanced engineering equipment, signing multiple overseas cableway projects [10] Group 6: Market Value Management - The company has implemented a long-term market value management strategy, distributing cash dividends of 155 million yuan in 2024, accounting for 42.8% of the net profit [11] Group 7: Future Development Goals - The company aims to become a technology-driven specialized engineering firm during the "15th Five-Year Plan," focusing on enhancing core competitiveness and serving national strategies [12]