Incidents:
The company released a briefing on the operating situation from January to June 2024.
The construction business has strong growth momentum. The infrastructure/overseas performance highlights the 2024H1 company's construction business signing a new contract amount of 2288.2 billion yuan, yoy +14%, and the growth momentum of new orders is strong. By business, the amount of new contracts signed for housing construction/infrastructure/ survey and design was 1532/749.1/7.2 billion yuan, respectively, +6%/+35%/-9% year-on-year. Infrastructure continued to increase rapidly, and housing construction growth was resilient. By region, new domestic and overseas orders were 2165.1/123.1 billion yuan respectively, +11%/+105% year-on-year, respectively, and continued to grow rapidly overseas.
The decline in real estate sales narrowed, and sales in a single month became positive. The real estate contract sales volume of the 2024H1 company was 191.5 billion yuan, yoy -21%, which was about 8 pcts narrower than in the previous May; the contract sales area was 6.55 million square meters, yoy -33%. The decline was about 6 pcts narrower than in the previous May. Real estate sales continued to be under pressure, but the decline narrowed. The contract sales volume for June was yoy +11%, which was corrected for the first time in a single month in 2024. By the end of 2024H1, the company's land reserves were 84.54 million square meters. Compared with +3.7 million square meters at the end of 2023, land reserves continued to increase.
The competitive advantage in many fields may continue to strengthen, and the valuation advantage is obvious. Maintaining the “buy” rating, the total cash dividend paid by the company in 2023 was about 11.3 billion yuan, accounting for 20.8% of the current net profit due to mother (a slight increase in recent years). The 2023 dividend corresponding to the current market capitalization dividend ratio is 5.0%. It is expected that the dividend ratio for 24 years may continue to rise steadily. We expect the company's revenue for 2024-2026 to be 2433.9/2621.2/2815.6 billion yuan, with year-on-year growth rates of 7%/8%/7%, respectively, and net profit to mother of 59.1/64.2/68.9 billion yuan, respectively, with year-on-year growth rates of 9%/9%/7%, EPS 1.42/1.54/1.66 yuan/share, respectively, and a 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, 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