24Q1 revenue/net profit ratio +0.5%/+2.0% YoY, maintaining the A/H “buy” rating

In 24Q1, the company achieved revenue/net profit attributable to mother of 2749/60.3/5.78 billion yuan, or +0.5%/+2.0% year-on-year, and net profit to mother basically met our expectations (6.085 billion yuan). We maintain the company's 2024-2026 net profit forecast of 274/287/29.7 billion yuan. Comparable to A Shares/H Shares, the company's 24-year Wind agreed to have an average expected average of 5/3xPE. Considering that the company's new management focused on improving quality and efficiency, the quality of operation is expected to improve. The approval was given to give A/H shares 5/3xPE in 24 years, maintain a target price of $10.09 for A shares, and adjust the target price for H shares to HK$6.67 (previous value of HK$6.68), all maintaining a “buy” rating.

The year-on-year increase in gross margin led to a slight improvement in net profit margin

The overall gross margin of the 24Q1 company was 7.8%, +0.02pct year on year, and the period expense ratio was 4.2%, +0.09pct year on year. Among them, the sales/management/R&D/finance expenses ratio was 0.56%/2.13%/1.03%/0.51%, and financial expenses increased 24% year over year, mainly due to short-term and long-term loans of 1205/175.5 billion yuan at the end of 24Q1, respectively, increasing interest expenses by 306/26.8 billion yuan. An increase of $311 million. The share of depreciation expenses in revenue was -0.05pct to 0.17% year on year. Under the combined influence, 24Q1 net profit margin was 2.19%, +0.03pct year over year.

Q1. Short-term cash flow outflows increase due to mismatch in payment pace

At the end of 24Q1, the company's interest-bearing debt ratio/ balance ratio was 23.4%/75.6%, respectively, +3.38/+0.09pct year-on-year, and +3.03/+0.66pct compared to the end of 23. The net cash flow from the company's operating activities in 24Q1 was 46.6 billion yuan, an increase of 7.4 billion yuan over the previous year. The revenue ratio was 105%, -1.24 pct year on year, and the payout ratio was 120%, +1.29 pct year on year. At the end of 24Q1, the company's bills receivable and accounts receivable amounted to $18.8 billion, contract assets of $30.4 billion, and contract liabilities of $146.5 billion, compared with the end of 23 billion yuan; notes payable and accounts payable of $528.8 billion, and advance payments of $26.3 billion, compared to the end of 23 billion yuan, respectively.

24Q1 new orders were +2.1% year over year, and emerging businesses such as green environmental protection had high growth of 55.7 billion yuan, +2.1% year over year. By business, infrastructure construction projects such as engineering contracting, investment and operation, and green environmental protection accounted for 87.92% of the total number of new contracts signed, respectively, 4101/464/27.7 billion yuan, respectively, +3.12%/+6.65%/+36.7%. Looking at segments, housing construction, mining, water conservancy and water transportation, and power engineering all increased by more than 40% year on year, and the rest of the sectors declined by more than 40% year on year. . By region, domestic business signed 516.7 billion yuan, or +1.46% year on year, while overseas business signed 33.9 billion yuan, +11.85% year over year.

Risk warning: The growth rate of infrastructure investment is slowing down, real estate recovery is lower than expected, and the increase in gross margin falls short of expectations