Incident: The company announced that in 2024Q1, it achieved revenue of 265.011 billion yuan, a decrease of 2.56%; net profit of 7.481 billion yuan, a decrease of 5.04%; and a decrease of 3.30% in net profit without deduction of 7.169 billion yuan.

Emerging businesses and overseas orders grew rapidly, and the housing development business continued to shrink. The company achieved new signings of 621.64 billion yuan in 2024Q1, a decrease of 6.9%. By business, engineering construction, design consulting, equipment manufacturing, characteristic real estate, asset management, resource utilization, finance and commodity trade, and emerging businesses each achieved new signings of 4701.2/75/144.7/67.3/120.5/61.3/180.4/86.6 billion yuan, with year-on-year changes of -7.1%/-3.1%/-10.7%/-60, respectively.

5%/-70.1%/-6.6%/4.8%/53.9% By region, the company achieved a new contract amount of 5724.1/49.23 billion yuan domestic/overseas, with year-on-year changes of -8.80%/23.00%, respectively. Looking at the real estate development and operation situation, the company added 148,000 **** meters of land reserves in 2024Q1; 18.5 of 10,000 **** meters of construction area decreased by 87.1%; 14.6 of 10,000 **** meters of completed area decreased by 90.8%; 46.3 of the contract area of 10,000 **** meters decreased by 52.7%; and the contract amount of 6.73 billion yuan decreased by 60.5%.

Profitability declined slightly, and cash flow was under pressure. The company's 2024Q1 gross margin was 8.58%, down 0.33pct; the period expense ratio of 4.73% decreased by 0.01pct. Among them, the company's sales/management and R&D/finance expense ratios were 0.51%/3.83%/0.38%, year-on-year change of -0.05pct/0.06pct/-0.03pct; asset and credit impairment loss ratio 0.25% decreased 0.16pct; the net cash flow from the company's 2024Q1 operating activities decreased by 0.07pct; the company's 2024Q1 operating cash flow net outflow of RMB 68.065 billion There was an increase of 30.041 billion yuan over the same period last year; the revenue ratio decreased by 5.53 pct; the current payment ratio increased 5.83 pct from 121.57%; as of 2024Q1, the size of the company's accounts receivable and notes, inventory+contract assets, accounts payable and notes, accounts payable and notes, accounts receivable and contract liabilities were 1869.6/4878.2/5758.2/137.78 billion, respectively, a year-on-year change of 17.79%/7.56%/-2.19% /0.

65%

Investment advice: We expect the company to achieve net profit of 367.87/395.48/43.384 billion yuan in 2024-2026, 9.87%/7.50%/9.70% compared with the same period, EPS of 1.41/1.53/1.68 yuan, and corresponding PE 4.68/4.33/3.93 times, respectively, maintaining the “increase” rating.

Risk warning: Order execution is slow, policy progress falls short of expectations, new business is not progressing as expected, etc.