Cement engineering technology has steadily ranked first in the world, and the transformation of operation, maintenance and equipment business has accelerated: the company acquired Sinoma Mine in 2021 to expand the mine operation and maintenance business; in 2022, it acquired the smart industry to improve the global layout of cement operation and maintenance; in February 2023, the Hefei Institute entered Sinoma International, and the company began integrating the equipment business. At the end of the 14th Five-Year Plan period, we will strive to achieve the trifecta of engineering, equipment, and service. Currently, equipment and operation and maintenance account for less than 1/3. We expect the operation and maintenance business to grow rapidly. Considering that the gross margin of operation and maintenance and equipment is significantly higher than that of the engineering business, it will help drive the company's overall profit level to increase.

Collaborate with the Group to speed up overseas and open up room for growth: in February 2024, the company completed a capital increase to participate in Sinoma Cement, with a shareholding ratio of 40%, building a joint overseas community for basic building materials, and further increasing the advantages of going overseas.

Cash flow has improved, dividends have increased, and the dividend rate is higher: The company's operating cash flow in 2023 exceeds net profit, and the improvement trend is obvious. The 24-26 dividend ratio is planned to increase 10% every year from 40%. The dividend ratio is high, and it is expected that it will continue to increase.

Profit forecast and rating: The company's cement engineering technology services rank first in the world. Equipment+ operation and maintenance continue to be deepened. Coupled with equity incentives, the 24-year performance is guaranteed. In addition, the company's cash flow improvement trend is obvious, and the 24-26 dividend ratio is planned to increase 10% each year from 40%. The dividend ratio is high and attractive. We expect the company's 24-25 EPS to be 1.28 and 1.45 yuan, respectively, with 10-11 times PE in 2024, with a reasonable value range of 12.75-14.03 yuan (corresponding to 1.59-1.75 times PB in 24), maintaining a “superior to market” rating.

Risk warning: macroeconomic risk, overseas business risk, exchange rate risk.