9M23 revenue / homing net profit year-on-year-2.1% pesque 16.1%, maintain "buy" rating company 9M23 achieve revenue of 45.6 billion, year-on-year-2.1% (retroactive), homing net profit 1.41 billion, year-on-year-16.1% (retroactive), lower than our forecast (1.64 billion), mainly due to the increase in expense rate and impairment resulting in profit pressure. Among them, 23Q3 realized revenue / return net profit of 14.4 billion, 49.7% of which was-7.8% compared with the same period last year. Considering that the physical amount of infrastructure investment has landed slowly since the beginning of this year, we adjust the forecast of the company's return net profit from 2023 to 2025 to 23.1 billion yuan 2.51 billion yuan (the previous value is 2.80 billion yuan 30.9 billion yuan). Comparable company 23-year Wind unanimously expected average 7xPE, approved to give the company 23-year 7xPE, the target price to 7.53 yuan (the previous value of 9.11 yuan), to maintain the "buy" rating.

9M23 comprehensive gross profit margin improved compared with the same period last year, and the increase in expense rate and impairment led to profit pressure. 9M23's comprehensive gross profit margin increased by 0.8pct to 12.1%, of which Q3 gross profit margin was 11.9%, compared with / compared with + 0.3/-1.1pct. The expense rate during the 9M23 period is 6.2%, year-on-year + 1.0pct, in which the sales / management / R & D / financial expense rate is year-on-year + 0.0/+0.2/+0.3/+0.5pct. Except for sales expenses, the other expenses increase year-on-year, the superimposed revenue decreases, and the expense rate increases rapidly. The expense rate during 23Q3 is 8.0%, year-on-year + 2.0pct, in which sales / management / R & D / financial expense rate is year-on-year + 0.0/+0.3/+0.9/+0.8pct.

The proportion of 9M23 impairment expenses to income is from + 0.7pct to 0.8% compared with the same period last year. Under the comprehensive influence, the company's 9M23 return net interest rate is 3.1%, year-on-year-0.5pct, of which 23Q3 is 2.0%, same / month-1.7/-2.8pct.

The increase in interest-bearing liabilities led to an increase in leverage, and the rapid growth of cash-to-cash ratio dragged down the financial expenses of 9M23 company + 64.2% year-on-year, of which 23Q3 was + 73.6% year-on-year, mainly due to the increase in the company's interest-bearing liabilities. At the end of September, the company's short-term borrowing / bonds payable increased by 68% and 148% respectively compared with the beginning of the year, leading to an increase in the company's leverage ratio. At the end of September, the company's interest-bearing liabilities accounted for 51.2% of the total invested capital, an increase of 6.9 pct over the beginning of the year; the asset-liability ratio was 78.1%, an increase of 0.38pct over the beginning of the year. The net operating cash outflow of 9M23 was 3.6 billion, 2.1 billion more than the same period last year, mainly due to the increase in work completed in the first three quarters and the short-term mismatch between sales payback and purchase payment time, with a cash-to-cash ratio of 76.3%, 87.7%, respectively, compared with the same period last year + 5.5/+12.5pct.

The Communications and Construction Group further enhanced the competitiveness of the company. According to the Shandong Provincial Department of Communications, the province's transportation investment of 2655 billion yuan in 21-22 is 3084 billion, with a 23-year target of more than 310 billion. Steady investment in the province provides a good market for the company. At the same time, in the first half of the year, the Communications and Construction Group is included in the scope of the company's merger. Its qualifications and technical advantages are expected to form coordination with the company's road and bridge construction and maintenance business. Further enhance the overall market competitiveness of the company. 23H1 company newly signed order 53.1 billion, year-on-year + 141% Magna Q3 won the bid for the major project Dongliang Expressway Shenhai Expressway to Xintai section of a total of 12.2 billion yuan, accounting for about 18.7% of the company's 22-year revenue, looking forward to the annual newly signed orders are expected to maintain good growth. By the end of 23H1, the company had 130.95 billion orders on hand, + 32% year-on-year, or about twice the 22-year revenue, which is expected to provide support for the company's revenue recognition in subsequent years.

Risk hint: the stable growth is not as expected, and the subsequent order conversion is not as expected.