According to UBS Group's report, China State Con's (03311.HK) first-half performance met expectations, with revenue and net profit up 12.1% and 12.7% annually to CNY 62 billion and CNY 5.5 billion, respectively. It pays an interim dividend of HKD 0.33 per share, up 20% year-on-year, equivalent to a dividend yield of 30.42%. Management guides for a gradual increase in the payout ratio.

The bank adjusted China State Con's earnings forecast from 0% to 2% for the years 2024 to 2026, raised the target price from HKD 12.8 to HKD 13.7, and maintained a "buy" rating.

UBS said that China State Con's management has revised their policy on dividend payout ratio guidance from "about 30%" to "not less than 30%, and will consider gradually increasing it in the future". In addition, the management has also maintained its net profit, new order and return on equity targets, which are a year-on-year increase of 10% this year, no less than CNY 210 billion within the year, and a 15% increase in 2025. And the management also reiterated its confidence in the Modular Integrated Construction (MIC) and announced plans for two projects in Beijing, Tianjin, Hebei, and the Yangtze River Delta in the next one or two years. (vc/w)

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