On October 16, 2023, the company issued a results announcement for the third quarter of 2023, with operating income of HK $6.409 billion in the first three quarters, + 25.5% year-on-year, operating profit of HK $658 million, + 35.8%, and newly signed contracts of HK $9.01 billion, + 11.6%.

The results are in line with high growth expectations, with strong revenue from Hong Kong, Macao and the mainland: HK $3.429 billion from Hong Kong and Macao curtain walls in the first three quarters of 2023, + 42.4% year-on-year; HK $1.241 billion from mainland curtain walls, + 53.7% from the same period last year; and gradually shrinking overseas revenues of HK $240 million, accounting for only 3.8% of the contribution. The year-on-year growth rate of the company's operating profit is higher than that of revenue, mainly due to the high proportion and rapid growth rate of Hong Kong and Macao projects with high profit level.

The core main business adheres to "expanding Hong Kong and Macao, expanding the mainland and shrinking overseas": in the first three quarters of 2023, the company signed new contracts of HK $9.01 billion, an increase of 11.6 per cent over the same period last year. Among them, HK $4.707 billion, accounting for 52.2% of the curtain wall of Hong Kong and Macao, won the bid for the Hong Kong Airport Authority Space Corridor, New World, and capital strategic real estate projects. the key future development directions of Hong Kong and Macao are the northern metropolitan area, tomorrow's Lantau and the 10-year hospital development plan. The mainland curtain wall was HK $2.377 billion, accounting for 26.4% (up 3pct over last year), with a growth rate of 25.9%. It won the bid for the second phase of Beijing New National Exhibition, Shenzhen Futian International Sports and Cultural Exchange Center, ZTE Super headquarters, Haoyuan Cloud Computing big data Base and other projects. The key development directions of the mainland in the future are new economy enterprises, Hong Kong / foreign developers, government public construction and boutique business departments.

Dispose of China Shipping Supervision, play down the non-core, and focus on the development of the main business: on October 11, the company issued an announcement that it intends to sell China Shipping Supervision for a price of no more than HK $950 million, and divest the supervision business. The transaction is expected to generate a sale income of about HK $530 million. At present, the main business of the curtain wall of the company is booming, so it properly disposes of the non-core business and focuses on the development of the main business; it will continue to divest other non-core business as planned in the future. The consideration of this transaction will realize the release of the value of China Shipping Supervision and will have a positive impact on the company's financial indicators.

The company adheres to the core main business strategy, the performance steadily implements the "14th five-year Plan", and the disposal of non-core business can bring sales proceeds, but as the transaction has not yet been completed, there is still uncertainty, we maintain the profit forecast unchanged. The net profit of homing in 2023-25 was HK $578 million, HK $788 million and HK $1.036 billion respectively, up 36.95%, 36.46% and 31.39% respectively over the same period last year. The current price of the company's shares corresponds to a PE valuation of 9.5, 6.9, and 5.3 times, maintaining a "buy" rating.

Risk hint

The divestiture business transaction is not progressing smoothly; the expansion of Hong Kong and Macao projects is slow; and the settlement of overseas projects is slow.