Event: the company issued an announcement on August 11, 2023, winning the bid for the project "Survey and Design of Water Resources efficient Utilization Project of Gantansi Reservoir in Zhangxian County (Section 1)"; the company issued the 2023 semi-annual report on July 28.

The net profit of 2023H1 homing has increased, and the proportion of engineering consulting revenue has increased.

2023H1 achieved an operating income of 1.182 billion yuan, a decrease of 3.83% over the same period last year, a net profit of 126 million yuan, an increase of 64.24%, and a non-return net profit of 123 million yuan, an increase of 86.06% over the same period last year. 23Q1/Q2 respectively achieved revenue of 525max 657 million yuan, respectively, compared with the same period last year, and achieved a net profit of 0.46 million yuan and 122.22%, respectively, compared with the same period last year. High growth was achieved in the first half of the year, mainly due to a low base in the same period last year and a return to normal operation this year. In terms of business, the revenue of the engineering consulting business reached 903 million yuan, an increase of 30.76% over the same period last year, and the proportion of the company's revenue increased by 20.2pct to 76.38%.

Cash flow has improved and profitability has improved slightly. The net operating cash flow of 2023H1 was-134 million yuan, which was 33.97% less than the same period last year, mainly due to the decrease in cash spent on purchasing goods and receiving labor services, as well as the lower salaries paid by employees. The company's financial expenses are also reduced by 8.3%, which is due to the fact that the company does not carry forward non-recurrent real estate business costs in the current period, the company increases the concentration of subsidiary funds, and the interest income increases. The gross profit margin and net profit margin of 2023H1 were 30.22% and 10.70% respectively, which increased 7.68pct and 4.49pct respectively compared with the same period last year. The gross profit margin of engineering consulting and construction was 36.76% and 13.89% respectively, which increased 2.88pct and 7.79pct respectively compared with the same period last year.

In 2023, the new bid won a number of major projects. On August 11, the company announced that its subsidiary company had won the bid for the project "Survey and Design of Water Resources efficient Utilization Project of Gantansi Reservoir in Zhangxian County (the first bid section)". The project includes a new total storage capacity of 3 million m? A reservoir, a new intelligent waterworks, buried all kinds of pipelines 28km and supporting irrigation channels 15km, the investment is estimated to be 320 million yuan. The company has won a number of major projects since 2023, and the order amount of survey and design is expected to exceed 300 million yuan.

Equity incentives stimulate enthusiasm and will be examined and approved by the Shenzhen Stock Exchange. The company has thoroughly implemented all the work of the three-year action of the national reform, carried out equity incentives, awarded a total of 11.41 million restricted shares to 891 key managers and core technical personnel, gave full play to the incentive policy and improved the market-oriented mechanism. The company issued a non-public A-share offering plan in June 2023, with no more than 114000000 shares to be issued to no more than 35 specific investors and no more than 760 million yuan in total funds to be raised. At present, the company's fixed increase plan has been examined and approved by the Shenzhen Stock Exchange. The funds raised will be used for the engineering testing center construction project, the whole process engineering consulting service capacity enhancement project and the integrated management, R & D and information capacity enhancement project. The fund-raising project will further help the company to enhance its market competitiveness, expand its market volume and enhance its profitability.

Investment suggestion: the company's revenue in 2023 is expected to be 2.601 billion yuan, an increase of 3.20% over the same period last year, and its net profit is 317 million yuan, which is 39.98% higher than the same period last year. EPS is 0.83 yuan per share, and the PE of the corresponding stock price is 13.36 times. It is recommended to cover it for the first time.

Risk hint: the risk of decline in the growth rate of fixed asset investment; the risk of accounts receivable.