occurrences

On April 23, 2024, the company announced its results for the first quarter of 2024. The first quarter achieved operating income of HK$2,031 million, +17.8% year over year; operating profit of HK$432 million, +30.8% year over year.

reviews

Revenue remained high, and profit margins increased steadily: The company's revenue growth in 1Q24 was mainly driven by the main curtain wall business. Hong Kong and Macau curtain wall, mainland curtain wall, overseas curtain wall and non-core businesses contributed HK$13.41, 2.53, 0.07 and HK$430 million respectively, of which Hong Kong and Macau curtain wall increased 57.8% year on year. The share of the high-profit margin Hong Kong and Macau curtain wall increased, driving the company's operating profit margin from 19.1% in 1Q23 to 2.2pct to 21.3% in 1Q24.

Adhering to the established strategy, the scale of new signings increased steadily: the total number of new contracts signed by the company in 1Q24 was HK$3,697 million, +4.9% year-on-year, including HK$2,423 million for the Hong Kong and Macau curtain wall, HK$612 million for the mainland curtain wall, and $662 million for non-core business. The leading position in the Hong Kong and Macau markets is stable, obtaining projects such as Jialulian Mountain Hospital, Macau Rehabilitation Hospital and Sun Hung Kai West Kowloon Art Plaza Building; mainland curtain walls are a high-energy city and won bids for projects such as the metal roof of Shenzhen Qianhai Huafa Ski Resort and Shanghai Sina headquarters; optimized the layout of overseas facades, withdrew from the North American market, and carefully grasped the viability of the curtain wall business layout in Singapore, the Middle East and other regions.

Promote BIPV applications and expand competitive advantages in technology: The company's 1Q24 BIPV application was further implemented, the mainland selected merit development projects, obtained the Jiangmen Hailong New Construction Technology Industrial Park project, and Hong Kong received an order for the Qingshan Highway renovation from the Highways Department. Emerging businesses such as BIPV are expected to become new growth points in the company's “15th Five-Year Plan” (2026-2030) development.

Investment advice

The company's main curtain wall business maintained high growth, and the “14th Five-Year Plan” performance was steadily implemented. The “15th Five-Year Plan” vigorously promoted the strategic layout of emerging businesses such as BIPV and expanded the blue ocean market. We forecast that the company's net profit for 2024/2025/2026 will be HK$788/10.35/HK$1,315 million, respectively, with year-on-year growth rates of 35.7%, 31.4% and 27.1%, respectively. The current price of the company's stock is 6.9/5.3/4.1 times the PE valuation, maintaining a “buy” rating.

Risk warning

Projects in Hong Kong and Macau are expanding slowly; new businesses are not developing smoothly; green construction policies have changed.