Description of the event

The company issued a 2024H1 business announcement and achieved new orders of 46.125 billion yuan in the first half of the year, an increase of 9.08% over the previous year.

Incident comments

New orders of 46.125 billion yuan were signed in the first half of the year, an increase of 9.08% over the previous year. Among them, construction business was 39.119 billion yuan, an increase of 13.10%; design business was 2.878 billion yuan, a decrease of 24.33%; operating business was 3.897 billion yuan, an increase of 0.07%; and digital business was 0.231 billion yuan. In the construction business, mainly municipal administration, energy, and road engineering contributed the main increase, with rail transit $7.775 billion, a decrease of 8.41%; municipal engineering $12.186 billion, up 38.09%; energy engineering $7.273 billion, up 53.88%; road engineering $2.706 billion, up 23.71%; real estate engineering, 5.807 billion yuan, a decrease of 28.43%; environmental engineering ; Other engineering categories were 1,521 billion yuan, a decrease of 32.27%.

Looking at the single quarter, new Q2 signings accelerated month-on-month, and business outside of Shanghai and overseas showed significant strength. In the second quarter, the company achieved new orders of 23.465 billion yuan, an increase of 11.02% year over year, and the growth rate increased by 3.87 pcts month over month. Q2 The company's new orders achieved double-digit growth, mainly due to the obvious strength of business outside Shanghai and overseas. Specifically, it is classified by space type:

2024Q2 underground business was 12.584 billion yuan, an increase of 62.72%; ground business was 8.342 billion yuan, a decrease of 19.14%; by geographical classification, 2024Q2 business in Shanghai was 9.397 billion yuan, a decrease of 25.87%; Shanghai's overseas business was 8.658 billion yuan, an increase of 61.07%; overseas business was 2.871 billion yuan, with no new overseas orders signed in the first or second quarter of last year.

Innovative businesses continue to advance, and intelligent and digital businesses drive the revaluation of the company's value. The company's innovative business is mainly divided into the following five areas: 1) engineering emergency rescue and subway maintenance services, mainly carried out through its subsidiary Chengdun Tunnel Safety Company. In 2023, the service cities were added to Xiamen and Tianjin, opening up the Hong Kong and Singapore markets; 2) The company's Shangneng Hospital, whose main business includes design, consulting and general contracting of long-range oil and gas transportation, hydrogen energy, wind photovoltaic power generation, integrated energy, dual carbon and ESG, etc.; 3) Digital shielding business, involving different strata and conventional operating environments such as soft ground layers, sandy strata, and composite strata; 4) Smart operation business, mainly operated through the company's subsidiary The Group's services cover all types of urban transportation infrastructure such as tunnels (tunnels), cross-river (cross-sea) bridges, urban expressways, urban roads (highways), highways, etc., as well as diversified facility operation and maintenance projects such as rail transit, comprehensive maintenance of urban areas, airport flight zones, and urban public facilities for high-speed rail stations. Smart City Operation and Management Co., Ltd. was also established, which completed the first data product transaction on the Digital Exchange last year; 5) The digital business is mainly carried out through its digital group, the Urban Construction Institute, the Operation Group, and the Shanghai Energy Institute. Currently, the main business is: smart infrastructure, smart transportation (building rapid allocation of public resources, agile prediction and early warning of major events through analysis and calculation of urban traffic networks, etc., including smart urban road traffic management platforms, smart traffic infrastructure management (road and bridge), intelligent urban parking management, intelligent connectivity and vehicle-road collaboration, etc.), smart environments, smart cities, and smart energy.

As a leader in infrastructure engineering in Shanghai, the company has strong financial strength, infrastructure needs are supported, and the main business is steady, moderate and upward; the company has technical accumulation and order experience in vehicle road collaboration (winning the bid for the vehicle road collaborative application construction project in Fengxian District of Shanghai on May 24, with a contract amount of 90.88 million yuan). At the same time, the company can accumulate large amounts of data throughout the entire process. If the data element policy is implemented at an accelerated pace, the company is expected to fully benefit from multiple city-level smart operation platforms. The company is expected to achieve net profit of 3.238 and 3.457 billion yuan in 2024 and 2025, corresponding to the current closing price PE of 6.31 and 5.91 times, respectively, with a “buy” rating.

Risk warning

1. Policy progress falls short of expectations;

2. The data element market transaction volume is expanding less than expected.