Maintain the increase in holdings. The performance fell short of expectations, and according to the company's annual report, the 2024 planned revenue growth rate was 4.1%. The forecast was lowered to the 2024-2025 EPS 0.45/0.48 (original 0.65/0.73) yuan corresponding growth rate of 8%/7%, and the 2026 EPS 0.51 yuan growth rate was predicted to be 6%. Maintain the target price of 5 yuan, corresponding to 11 times PE in 2024.

Net profit fell 15.6% in 2023, which fell 86.3% in 2023Q4. (1) Revenue of $633.9 billion in 2023 increased by 7.0% (Q1-Q4 increased by 22.4/11.0/23.2/ -14.9%), of which engineering contracts of 585.5 billion yuan increased by 9%, resource development of 6.8 billion yuan decreased by 23%, characteristic business of $32 billion increased by 0.2%, and comprehensive real estate of 16.5 billion decreased by 27%. Net profit of 8.67 billion yuan decreased by 15.6% (Q1-Q4 increased 25.8/20.6/15.0/ -86.3%).

Net operating cash flow fell 68% in 2023, and accounts receivable and impairment increased. (1) Net operating cash flow of $5.89 billion in 2023 ($18.15 billion for the full year of 22), Q1-Q4 was -215.6/70.4/-79.6/28.37 billion (-145.4/147.1/-1.774 billion in '22). In 2023, the payout ratio was 77% (22% for the whole year), and the payout ratio was 75% (84% for the whole year). (2) Total operating and investment cash flow - $8.3 billion ($11.59 billion for the full year).

(3) Accounts receivable of $130 billion increased by 39%, and impairment losses totaled $8.95 billion ($4.96 billion for the full year).

New orders increased by 6% in 2023, and the mineral resources business can be expected in the future. (1) In 2023, 1424.8 billion new signings increased by 6% (up 12% in the same period in '22). Overseas signings reached a record high of 63.4 billion yuan in 2023, an increase of 44%.

(2) The Ruimu nickel-cobalt mine in Pakistan stores 1.26 million tons of nickel and 140,000 tons of cobalt, with an annual output of 33,604 tons of nickel and 3072 tons of cobalt; Pakistan's Shandak copper-gold mine stores 1.84 million tons of copper with an annual output of 17,000 tons of copper; Pakistan's Duda lead-zinc mine stores 330,000 tons of lead and 690,000 tons of zinc per year. The total profit of the three active mines was 1,214 billion yuan. (3) Copper reserves of 3.78 million tons were discovered at the Siadik copper mine in Pakistan, and 1.08 million tons at the Enak copper mine in Afghanistan. It is expected that the two mines will increase profits after they are put into operation.

Risk warning: macroeconomic policy risks, overseas business risks, etc.