Q2 deduction non-performance increased by 48%, optimistic about the company's medium-and long-term development potential company 23H1 achieved revenue of 1.422 billion, year-on-year + 25%, home net profit of 249 million, year-on-year + 14%; deduction of non-net profit of 276 million, year-on-year + 30%. Q2 achieved revenue of 742 million in a single quarter, + 22% year-on-year, 125 million net profit, + 17% year-on-year, and 150 million non-net profit, + 48% year-on-year. 23H1 Anhui transportation / municipal completed investment is + 25.5% / 7.6% respectively compared with the same period last year, driving the company's newly signed orders in 23H1 province + 66% year on year. We estimate that the company's net return profit in 23-25 years is 5.9pm / 660 million, which is 11.8 times higher than the company's average PE in 23 years. We approve to give the company 14 times PE in 23 years, corresponding to the target price of RMB12.81and maintain the "Buy" rating.

General contracting business orders have increased rapidly, and remarkable results have been achieved in business development in new areas. From the revenue side, 23H1 survey and design / project management / project general contractor categories have achieved income of RMB 9.02 million, respectively, compared with the same period last year. + 5.9%, + 10.53%, 10.53% and 110%, respectively. With regard to orders, 23H1 signed a new contract of 2.199 billion yuan, + 56% year-on-year, and an on-hand order of 8.238 billion yuan, an increase of 8.29% over the end of 2022. From a sub-sector point of view, the newly signed contracts for survey and design / project management / project general contracting are 1.295max 855 million. In the development of new areas, urban construction / intelligent engineering / engineering health care / civil aviation and airport business respectively signed contracts of 1.05max 0.22max 0.15 million, year-on-year changes of-10%, respectively, change of 162% and 907%, 34%, and overall, new orders in new areas are + 54% year on year.

Regional infrastructure investment in Anhui is booming, with a substantial increase in newly signed orders in the province, 23H1 realized income of 1.153 billion yuan in the province, + 28.73% year on year, and 264 million yuan outside the province, + 8.77% year on year. From a regional point of view, 23H1 company's provincial market newly signed orders of 1.947 billion yuan, year-on-year + 66%, new orders signed outside the province of 252 million yuan, + 9% year-on-year. In 2023, Anhui Province will further expand transportation investment and strive to complete the transportation construction investment of more than 110 billion yuan. In the field of transportation investment, Anhui Province completed a total of 70.07 billion yuan in fixed assets investment in the first half of 23 years, + 25.5% year on year, and completed the annual planned task of 56.0%. Among them, the cumulative investment of expressways / ordinary provincial trunk highways / stations reached RMB 3.776 billion RMB 18.91 billion, an increase of 40.4% over the same period last year. In the field of municipal administration, the investment in municipal infrastructure in 23H1 Anhui Province totaled 64.441 billion yuan, + 7.6% compared with the same period last year. 2022-2025 urban municipal infrastructure construction projects in Anhui Province carried out key projects such as urban road traffic system, sewage and garbage treatment facilities, urban water supply and drainage system, and municipal public pipe network renovation, with an investment scale of more than 500 billion yuan, with an average annual growth rate of more than 10%.

The gross profit margin is under a little pressure, and the fee control situation is better.

23H1's comprehensive gross profit margin was 36.2%, down 2.52pct from the same period last year. The expense rate during 23H1 is 10.24%, which is-0.45pct compared with the same period last year; the sales / management / R & D expense rate is 2.27%, 5.29% and 2.91% respectively, with year-on-year changes of-0.01pct/ + 0.51pct/-1.34pct. The fee control effect is good, and the scale advantage is prominent. Under the comprehensive impact, the company's 23H1 net interest rate is 17.64%, year-on-year-1.54pct. The net CFO of 23H1 Company is-286 million yuan, the year-on-year outflow is-324 million yuan, and the cash-to-cash ratio / cash-to-cash ratio is 80%, 89%, respectively, and the year-on-year change is-2.55/+10.18pct.

Risk tips: order execution is not as expected; infrastructure investment is not as expected; digital intelligence business development is not as expected.