内地业务实现突破，负债压力有所好转。公司2023 年实现毛利率14.4%，同比提升0.7pct，主要系公司内地业务进一步扩张，带动公司整体盈利能力提升。公司全年内地新中标项目90%分布于长三角、大湾区，内地业务持续聚焦优质区域，同时积极拓展公司影响力。报告期内，保障房定购项目首次打入广州等地。财务费用率下降0.1pct，带动净利率提升0.1pct 至0.8%。财务费用率下降原因，一方面国内利率同比下降，另一方面公司积极置换海外高息负债，减轻整体负债压力。公司在内地首次发行绿色公司债23 中建国投G1，该债券为全国首单装配式建筑认证最高等级的绿色公司债券。最终，公司财务结构优化后，截至2023 年年报，净借贷比控制在66.1%，同比下降3.3pct。Description of the event
China Construction International released its 2023 annual report, achieving sales of HK$113.734 billion, an increase of 11.5%; gross margin increased 13.7% to 14.4% from 2022; and net profit to mother of HK$9.164 billion, an increase of 15.2%.
Incident comments
The mainland business has achieved a breakthrough, and debt pressure has improved. The company achieved a gross profit margin of 14.4% in 2023, an increase of 0.7 pct over the previous year. This was mainly due to the further expansion of the company's mainland business, which led to an increase in the company's overall profitability. Throughout the year, 90% of the new projects won by the mainland were distributed in the Yangtze River Delta and Greater Bay Area. The mainland business continued to focus on high-quality regions while actively expanding the company's influence. During the reporting period, guaranteed housing purchase projects entered Guangzhou and other places for the first time. The financial expense ratio decreased by 0.1 pct, driving the net interest rate to increase by 0.1 pct to 0.8%. The reason for the decline in the financial expense ratio is, on the one hand, domestic interest rates fell year on year, and on the other hand, the company actively replaced high-interest overseas debt to reduce overall debt pressure. The company issued the first green corporate bond 23 China Construction SDIC G1 in the Mainland. This bond is the first green corporate bond with the highest level of prefabricated construction certification in the country. Ultimately, after optimizing the company's financial structure, as of the 2023 annual report, the net loan ratio was controlled at 66.1%, a year-on-year decrease of 3.3 pcts.
In terms of business segments, Hong Kong was disrupted by a high base, and the rest of the divisions achieved high growth in performance. The Mainland benefited from the company's continued focus on the development of high-quality areas, while further increasing production capacity of prefabricated buildings, and finally achieved revenue/performance of HK$661.85 and HK$11.558 billion, up 36.1%/12.4% year on year; Hong Kong Division, which ultimately achieved revenue/performance of 308.22 and HK$1,036 billion due to the high base of public health projects in 2022, a decrease of 17.2%/19.3% year on year; Macau Division, large-scale entertainment and hospital projects continued to be built. At the same time, several projects began to profit this year and eventually achieved revenue of 107.7 and HK$960 million, up 2.2%/76.5% year over year.
The Group accelerated repayment and achieved a return in operating cash flow for the first time under high growth in the mainland. The company continues to strictly manage payments, and has achieved growth in overall operating performance and investment cash flow. In 2023, the company achieved an overall operating cash flow inflow of HK$500 million and an investment cash flow of 1.2 billion yuan. The improvement in cash flow was mainly due to the collection of repurchase amounts due to the company's share of joint venture investments. The company obtained HK$46.15 billion in repurchases from construction-related investment projects, an increase of 45.6% over the previous year.
The signing of new contracts will guide the direction, and infrastructure in Hong Kong and Macau is on the rise. In 2023, the company achieved new signings of HK$18.018 billion, an increase of 17.0% over the previous year. Among them, Hong Kong signed $70.21 billion, a significant increase of 58.0%. The company made progress in the northern metropolitan area during the reporting period, winning iconic projects such as the Yuen Long Flood Control Dam, a large-scale public utility project, and the Tin Shui Wai Cultural Heritage Restoration Resource Centre. Looking ahead to the long term, the Hong Kong Government has the determination and financial resources to promote large-scale infrastructure projects such as the Northern Metropolitan Area and Lantau Island tomorrow. As of March 31 this year, the Hong Kong Government's fiscal balance is expected to be HK$73.32 billion. Observations have revealed that since 2015, the Hong Kong government's capital expenditure can leverage 2.88 times the total construction output value. If HK$120 billion of bonds are issued every year for the next 5 years, all of which are used for construction expenses, it can leverage the construction output value of HK$345.6 billion per year. On the other hand, in August of last year, Director Chen proposed a number of financing methods that can be used to support large-scale infrastructure projects. In addition to issuing bonds, they also include: ① railway+property development model; ② BOT model; ③ introduction of long-term funds. Refer to our previous export report “Hong Kong and Macau Infrastructure is on the rise, and cash flow improvements are showing initial results”: considering the company's revenue share of 21% in the Hong Kong construction market in 2022, and the market share of orders is 28%. If it receives 25% orders for the two major projects every year in the future, based on China Construction's international revenue in 2022, it will increase the company's revenue in Hong Kong by 134% and boost overall revenue by 49%.
Risk warning
1. Prices of raw materials fluctuate greatly; 2. Urban projects in northern Hong Kong fall short of expectations; 3. Tomorrow's Lantau project falls short of expectations; 4. The increase in the penetration rate of prefabricated buildings falls short of expectations.
