Core Viewpoint - Xiamen Municipal Group Co., Ltd. has been rated "AAA" for its 2023 first phase medium-term notes, reflecting its strong financial position and operational stability [1][2]. Group 1: Economic and Operational Overview - Xiamen has significant geographical advantages and a solid industrial foundation, with expected growth in economic levels and general budget revenue in 2024 [2]. - The company has undergone a change in its controlling shareholder from Xiamen Municipal Government State-owned Assets Supervision and Administration Commission to Xiamen State-owned Capital Operation Co., Ltd., while the actual controller remains the same [2]. - The company will focus more on its core business after a major asset restructuring in October 2024, which will lead to a significant reduction in asset and revenue scale due to decreased area development and planning design activities [2]. Group 2: Revenue Sources and Business Focus - In 2024, the company's total operating revenue will primarily come from engineering construction, water supply, and waste incineration power generation, with engineering construction being a strong and sustainable source of income [2]. - The water supply business remains exclusive in Xiamen, showing revenue growth, while the waste incineration power generation business holds a leading position in the city, contributing to increased revenue [2]. Group 3: Financial Position - The company's assets are mainly non-current, with average liquidity, and its interest-bearing debt is primarily long-term, indicating a light overall debt burden [2]. - The company demonstrates strong debt repayment indicators, with accessible indirect financing channels and manageable potential liability risks [2].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [4][12]. Core Insights - The company reported a revenue of 6.609 billion RMB for 2024, representing a year-on-year increase of 67.49%, and a net profit attributable to shareholders of 0.96 billion RMB, up 45.03% year-on-year [1]. - The construction business has significantly contributed to the sustained high growth in performance since its initiation in 2022, with construction revenue reaching 5.926 billion RMB, a year-on-year increase of 83.12% [2]. - New contract signings for 2024 totaled 5.57 billion RMB, a decrease of 62.7% year-on-year, with engineering consulting contracts slightly increasing while construction contracts were adversely affected by the real estate sector [2]. - The company improved its cash flow, with a net operating cash flow of 4.71 billion RMB, up 5.69% year-on-year, and total cash collections reaching 6.155 billion RMB, an increase of 78% [3]. - The report forecasts net profits for 2025-2027 to be 1.29 billion RMB, 1.29 billion RMB, and 1.61 billion RMB, with respective growth rates of 34.9%, 0.3%, and 24.5% [4]. Summary by Sections Financial Performance - Revenue for 2024 is projected at 6.609 billion RMB, with a growth rate of 67.5% [7]. - Net profit for 2024 is expected to be 0.96 billion RMB, reflecting a growth rate of 45% [7]. - The diluted earnings per share for 2024 is estimated at 0.37 RMB [7]. Future Projections - Revenue projections for 2025 and 2026 are 8.675 billion RMB and 6.95 billion RMB, respectively, with growth rates of 31.3% and -19.9% [7]. - The company anticipates a return on equity (ROE) of 11.2% in 2025, increasing to 12.2% by 2027 [7]. Market Sentiment - The report indicates a consistent "Buy" sentiment in the market, with multiple recent recommendations supporting this view [11].