Core views:
Anhui Construction Engineering released its 2024 quarterly report. According to the first quarterly report, 2024Q1 achieved revenue of 13.538 billion yuan, -16.25%; net profit to mother of 310 million yuan, -10.75% year over year; deducted non-net profit of 284 million yuan, -23.52% year on year.
Gross margin increased significantly, and net margin increased slightly. The company's 24Q1 gross margin/net margin/ROE (weighted) was 12.98%/2.93%/2.46%, respectively, with year-on-year changes of +2.14/+0.23/ -0.15pct, respectively, and gross margin increased significantly. In terms of cash flow, the company's net operating cash outflow in 24Q1 increased year-on-year (23Q1 net operating cash flow outflow of 1,565 billion yuan). Furthermore, the company successfully issued 500 million yuan of ultra-short-term financing notes and issued record low interest rates. The registration of its 4 billion yuan corporate bonds and 2 billion yuan renewable bonds was approved, and the company's current financing pressure is low.
Orders for water conservancy projects have increased, and emerging businesses are growing well. The company signed new engineering contracts of 38.979 billion yuan in 24Q1, +1.37% over the same period last year. The order structure continues to be optimized, the infrastructure business accounts for 66.97%, and the advantage continues to be consolidated. Orders for water conservancy projects were abundant, with new orders of 6.037 billion yuan, an increase of 888.05% over the previous year. The housing construction business focuses on high-quality orders. Industrial parks account for 48.77% of housing construction orders, and projects such as affordable housing for schools and hospitals account for 51.23%. Emerging businesses grew well. Among them, the design and inspection business signed 510 million yuan of new contracts (including internal orders) of 510 million yuan in 24Q1; new contracts (including internal orders) were signed in the prefabricated construction business of 835 million yuan, +85.91% year on year; new contracts (including internal orders) were signed in the building materials business (including internal orders) of 10.042 billion yuan, +6.05% year on year, and growth gradually showed.
Profit forecasting and investment advice. The company's net profit for 24-26 is estimated to be 1,788/20.62/2.80 billion yuan, respectively. The judgment of a reasonable value of 5.62 yuan/share remains unchanged, corresponding to the 24-year valuation of about 5.4 times PE, maintaining a “buy” rating.
Risk warning: New orders fall short of expectations; order execution falls short of expectations; new business falls short of expectations.