The company released its quarterly report for 2014. The 24Q1 revenue was 549.3 billion yuan, yoy +5%; net profit to mother was 14.9 billion yuan, yoy +1%; net profit after deducting non-return to mother was 14.7 billion yuan, yoy +1%.
The 24Q1 engineering business continued to grow, and real estate development continued to be under sufficient pressure on on-hand orders to support the company's revenue growth. By business, revenue from housing construction/infrastructure/real estate development/survey and design was 3,658/1,277/465/2.6 billion yuan, YOY +6%/-9%/+3%, respectively.
Engineering-related businesses grew well, and real estate revenue continued to grow negatively due to the impact of the industry environment and early sales pressure.
Profitability was slightly pressured. The gross margin of housing construction and infrastructure improved slightly to 8.1%, yoy-0.0pct; the net profit margin of the 24Q1 company was 2.7%, yoy-0.1pct. Profitability was basically stable, under slight pressure, and there was a lot of increase in exchange rate fluctuations or financial expenses. The 24Q1 company's financial expense ratio yoy+0.2pct to 0.8%. By business, the gross margin of housing construction/infrastructure/real estate development/survey and design was 6.2%/8.6%/19.2%/10.8%, and YOY was +0.0/+0.1/+2.9/-3.2pct, respectively. The gross margin of housing construction and infrastructure improved slightly year over year, but the real estate development business was dragged down a lot.
New housing infrastructure signing continued the growth trend, and real estate sales continued to be under strong downward pressure. Judging from orders, 24Q1 signed a new contract amount of 1,1885 billion yuan (including real estate sales), yoy +10%, and new orders maintained a steady growth trend. By business, the amount of new contracts signed for housing construction/infrastructure/survey and design was 8062/305/40 billion yuan respectively, +11%/+23%/-4% year-on-year. The order structure continues to be optimized, and the environmental contribution of industrial plants/energy engineering/water services increased significantly, +40%/+235%/+86% year-on-year respectively. 24Q1 real estate contract sales were 77.8 billion yuan, yoy -31%, and real estate sales continued to be under pressure. By region, new orders signed at home and abroad were 10,883/22.4 billion yuan respectively, +14%/+38% year-on-year, respectively. Overseas growth rates were superior to domestic growth.
Competitive advantage in multiple fields may continue to strengthen, and maintain the “purchase” rating. We expect the company's revenue for 2024-2026 to be 24,339/26,212/2815.6 billion yuan, with year-on-year growth rates of 7%/8%/7%, respectively, and net profit to mother of 591/642/68.9 billion yuan, respectively, with year-on-year growth rates of 9%/9%/7%, EPS of 1.42/1.54/1.66 yuan/share, and 3-year CAGR of 8%.
We believe that in the context of changes in the infrastructure and real estate industry, the company's leading position as a major field may continue to be strengthened, and the quality of reports may also continue to improve. Referring to comparable company valuations, we gave the company 6 times PE in 2024, with a target price of 8.52 yuan, maintaining a “buy” rating.
Risk warning: Real estate demand is lower than expected, the growth rate of infrastructure investment falls short of expectations, the pace of order revenue conversion is slowing down, repayment risk, and impairment risk