We have reaffirmed our “buy” rating and maintain our target price of HK$3.10. We slightly lowered China Construction Industrial's earnings per share forecast for 2024/2025/2026 by 0.9%/0.3%/0.7% to HK$0.335/HK$0.444/HK$0.537, respectively. We maintain a target price of HK$3.10, which is equivalent to 7.8 times/6.1 times/5.0 times 2024/2025/2026 EV/EBITDA.

Shareholders' net profit increased 26.1% year-on-year to HK$0.55 billion in the first half of 2024, and the results were in line with expectations. Total revenue for the first half of 2024 increased 0.1% year over year to HK$4.722 billion. Among them, curtain wall and contract engineering business increased 1.8% year over year to HK$4.214 billion, while operation management business decreased 8.3% year over year to HK$0.508 billion. The total amount of new contracts signed was HK$6.044 billion, a year-on-year decrease of 8.7%. As of June 30, 2024, the total number of orders in hand increased 12.8% year over year to HK$17.275 billion.

There are still long-term opportunities for curtain wall business in the Hong Kong and Macau markets. As the government continues to invest in infrastructure and the tourism economy recovers, demand for construction in Hong Kong and Macau continues to rise. This has provided a continuous growth impetus for China Construction Industry's façade business. Furthermore, the company successfully obtained its first curtain wall project in Singapore, marking the company's strategic expansion into overseas markets and enhancing the company's ability to undertake potential hotel and resort projects in other Southeast Asian markets.

The photovoltaic building integration (BIPV) business will make significant contributions during the “15th Five-Year Plan” period. The near-zero energy construction market is expected to create a trillion dollar market for BIPV products. The company's products have passed 56 TUV tests and 105 supplementary tests, ensuring technological leadership. The company has successfully implemented more than 10 BIPV pilot projects, including large commercial centers and multiple government buildings, demonstrating the technical strength of its transparent photovoltaic windows and roof systems. We estimate that the BIPV business will contribute up to HK$15 billion, accounting for over 40% of the company's total target of HK$35 billion in new contracts in 2030.

Catalysts: 1) The company obtained the first 26,500-square-meter curtain wall contract in Singapore, which achieved breakthrough progress, highlighting the company's overseas strategic expansion; 2) Dual carbon goals and policies at all levels quickly spawned market demand for BIPV products.

Risks: 1) Government infrastructure spending may fall short of expectations; 2) Overseas project risk.