Core Viewpoint - China State Construction International is focusing on high-quality development through technological innovation, particularly in the context of traditional construction industry upgrades and policies promoting smart manufacturing, prefabricated decoration, and green buildings [1] Financial Performance - For the first half of 2025, the company reported revenue of 56.643 billion yuan and a net profit attributable to shareholders of 5.259 billion yuan [1] - The interim dividend declared is 0.34 HKD per share, with a payout ratio of 31.1%, an increase of 0.7 percentage points compared to the same period last year [1] - The company has maintained stable operating cash flow, reflecting its resilience as an industry leader [1] Project Acquisition and Market Position - The company has secured over 100 billion HKD worth of projects in the Northern Metropolis, reinforcing its market leadership [3] - Significant projects include the New Territories West Fill Bank Expansion, with a contract value of 39.2 billion HKD, and new public housing contracts in Yuen Long [3] - The company has a strong track record in environmental engineering, with projects like the Sha Tin Cavern Sewage Treatment Plant and the Tseung Kwan O Desalination Plant [3] Future Opportunities - The company is poised to benefit from the ongoing infrastructure demands driven by the booming tourism industry in Macau, with multiple hotel renovation and expansion projects [4] - Upcoming infrastructure projects in the Northern Metropolis, including the West Rail (Hung Shui Kiu to Qianhai) and the Kai Tak Smart Green Transport System, are expected to create new opportunities [4] - The Northern Metropolis is projected to see an increase in land and housing output, addressing housing shortages and enhancing living conditions [4] Technological Innovation - The company is leveraging technological advancements to differentiate itself in a competitive market, focusing on modular construction (MiC) technology [8][9] - Successful applications of MiC technology in various projects demonstrate its ability to enhance construction efficiency and quality [9] - The company is well-positioned to capitalize on the growing demand for prefabricated and modular buildings as policies promote their implementation [10] Strategic Expansion - The company has a solid financial foundation and leading technological advantages, which support potential strategic acquisitions for future growth [13] - The dual-track breakthrough in both Hong Kong and mainland markets, driven by policy and market dynamics, positions the company for sustained growth [12]

Group 1 - The company reported a revenue of RMB 56.643 billion for the six months ending June 30, 2025, representing a year-on-year increase of 0.1% [1] - Shareholders' profit attributable to the company was RMB 5.259 billion, an increase of 5.1% year-on-year, with basic earnings per share at 101.43 cents [1] - The company plans to distribute an interim dividend of 34 Hong Kong cents per share [1] Group 2 - The company is actively participating in public housing construction in Hong Kong, winning contracts for projects in Yuen Long, utilizing MiC technology for improved service delivery [1] - The company is maintaining its leading position in the Northern Metropolis construction, securing contracts for projects like the first phase of the flood bridge water treatment facility [1] - The company has benefited from the tourism economy in Macau, winning multiple hotel renovation and expansion projects, including the M8 Macau project, which received international awards [1] Group 3 - The company is optimizing management in mainland China to enhance investment and construction technology business integration, promoting regional management collaboration [2] - The company has implemented a refined management approach for ongoing projects to ensure timely progress [2] - MiC technology is penetrating the mainland market, with successful projects in Beijing and Guangzhou, including the first modular building project to receive floor area incentive policies [2] Group 4 - The company’s subsidiary, China Construction Industry Group, is maintaining a leading market share in the Hong Kong and Macau curtain wall business, expanding into maintenance and upgrade services [3] - The company is deepening resource collaboration between Hong Kong, Macau, and mainland China, enhancing contract quality and trust with clients [3] - The company is expanding into the Singapore market, winning a contract for the Changi Airport T2 hotel project, which includes BIPV technology, aiming to become Singapore's first zero-energy hotel [3]

Group 1 - The company reported a revenue of RMB 56.643 billion for the six months ending June 30, 2025, representing a year-on-year increase of 0.1% [1] - Shareholders' profit attributable to the company was RMB 5.259 billion, an increase of 5.1% year-on-year, with basic earnings per share at 101.43 cents and an interim dividend of 34 Hong Kong cents proposed [1] - The company actively participates in public housing construction in Hong Kong, winning projects in Yuen Long and utilizing MiC technology to enhance service delivery [1] Group 2 - The company is optimizing management in mainland China to promote regional management integration in investment and construction technology, enhancing resource efficiency and business collaboration [2] - The company has successfully implemented a new ordering model in cities like Dongguan and Jinan, and is focusing on fine management of ongoing projects to ensure timely progress [2] - MiC technology is penetrating the mainland market, with projects like the comprehensive renovation of Beijing No. 14 Middle School and the Guangzhou Nansha resettlement housing project being notable examples [2] Group 3 - The company’s subsidiary, China Construction Industry Group, maintains a leading market share in the Hong Kong and Macau curtain wall business, focusing on quality service and expanding into maintenance and upgrade services [3] - The company is deepening resource collaboration between Hong Kong, Macau, and mainland China, gaining trust from developers and improving contract quality [3] - The company is expanding into the Singapore market, having won the Changi Airport T2 hotel project, which includes BIPV technology, marking a significant milestone in sustainable construction [3]

Group 1 - The company reported a steady growth in performance, with new contract value reaching RMB 92.551 billion and unaudited revenue of RMB 56.643 billion, reflecting a year-on-year increase of 0.1% [1] - Shareholder profit increased by 5.1% to RMB 5.259 billion, with basic earnings per share at RMB 1.01. The board announced an interim dividend of HKD 0.34 per share, with a payout ratio of approximately 31.1% [1] - The company aims for high-quality development amidst a complex market environment, focusing on finding new growth points and enhancing technological capabilities in construction [1] Group 2 - The company is optimizing management in mainland China to promote integration of investment and construction technology, enhancing resource efficiency and business collaboration [2] - The company has initiated deep regional development in several hundred billion operating units, with a new ordering model implemented in cities like Dongguan and Jinan [2] - The MiC technology continues to penetrate the mainland market, with successful projects including the comprehensive renovation of Beijing's No. 14 Middle School and the Guangzhou Nansha resettlement housing project, which became the first modular building project to enjoy floor area ratio incentives in the country [2]

Investment Rating - The report maintains a "Buy" rating for China State Construction International (3311 HK) with a target price of HKD 18.79 [8][9]. Core Views - The strategic premium subscription by China Orient Asset Management (International) Holdings Limited, which will increase its stake from approximately 3.56% to 8.02%, reflects confidence in the company's future development in international markets and construction technology [1][3]. - The transaction is expected to significantly optimize the company's balance sheet and enhance operational capabilities, with approximately 16.67% of the proceeds allocated to debt repayment and the remaining funds directed towards construction technology and business investments [3][5]. - The booming development of the Northern Metropolis and the focus on urban renewal in mainland China present opportunities for the company, particularly in prefabricated construction [4]. Financial Projections - The report forecasts the company's net profit attributable to shareholders for 2024, 2025, and 2026 to be HKD 10.425 billion, HKD 11.830 billion, and HKD 13.361 billion respectively, with a steady growth rate [5][7]. - Revenue is projected to grow from HKD 113.734 billion in 2023 to HKD 157.989 billion by 2026, reflecting a compound annual growth rate [7][18]. - The company's estimated PE ratio for 2025 is set at 8x, with a target price adjustment from HKD 16.64 to HKD 18.79 based on strong contract growth and improved profitability [5][8].