Event: The company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 1.564 billion yuan, a year-on-year increase of 9.94%; net profit to mother was 0.234 billion yuan, a year-on-year decrease of 5.99%.

Revenue from the general engineering contracting business is growing rapidly. 2024H1 achieved revenue of 1.564 billion yuan, a year-on-year increase of 9.94%; among them, the survey and design business achieved revenue of 0.83 billion yuan, a year-on-year decrease of 8.02%; and the general engineering contracting business achieved revenue of 0.659 billion yuan, a year-on-year increase of 46.19%. The engineering management business achieved revenue of 0.068 billion yuan, an increase of 7.14% over the previous year. The provincial market achieved revenue of 1.29 billion yuan, an increase of 11.86% over the previous year. The overseas market achieved revenue of 0.267 billion yuan, an increase of 1.44% over the previous year. During the reporting period, the company achieved net profit of 0.234 billion yuan, a year-on-year decrease of 5.99%; realized deduction of non-net profit of 0.229 billion yuan, a year-on-year decrease of 17.15%. The company achieved a net cash flow of 0.446 billion yuan from operating activities, an increase of 0.16 billion yuan over the previous year, mainly due to the fact that current project payments were higher than in the same period last year.

The management fee rate has declined. 2024H1's gross margin was 33.97%, down 2.24pct year on year; net margin was 15.26%, down 2.38pct year on year. The cost rate for the period was 11.19%, an increase of 0.95pct over the previous year. The sales expense ratio was 2.3%, an increase of 0.03 pct over the previous year. The management expense ratio was 4.58%, down 0.71 pct year over year. The financial expense ratio was -0.03%, an increase of 0.2 pct over the previous year.

Highway investment in Anhui is growing rapidly, and the low-altitude economy is being actively deployed. For 2024H1, the company signed a new contract of 1.598 billion yuan, a year-on-year decrease of 27.33%, and on-hand orders of 8.509 billion yuan, down 0.79% from the end of 2023. The domestic market signed a new contract of 1.352 billion yuan; the foreign market signed a new contract of 0.246 billion yuan. Divided by industry, the survey and design business signed a new contract of 0.997 billion yuan. A new contract of 0.127 billion yuan was signed for the engineering management business. A new contract amount of 0.474 billion yuan was signed for the general engineering contracting business. In the first half of the year, Anhui Province completed a total investment of 75.39 billion yuan in fixed transportation assets, an increase of 7.6% over the previous year. Among them, the highway completed a total investment of 44.03 billion yuan, accounting for 58% of the total transportation investment, an increase of 16.6% over the previous year. The company focuses on low-altitude planning and design, full-process services, platform construction, etc., and has achieved a series of results. In the first half of the year, the company connected with various cities, counties and districts in Anhui Province on low-altitude economic projects, and carried out research on low-altitude economic planning and operation in Anhui Province with the Anhui Branch of the East China Regional Air Traffic Administration of Civil Aviation of China.

Investment advice: The company's net profit for 2024-2026 is expected to be 0.507/0.557/0.638 billion yuan, respectively, or +3.83%/+9.80%/+14.57%, respectively. The corresponding P/E is 8.78/8.00/6.98x, respectively, maintaining the recommended rating.

Risk warning: risk of falling fixed asset investment; risk of new orders falling short of expectations; risk of accounts receivable recovery falling short of expectations.