Revenue and profit were briefly pressured to maintain a “buy” rating

The company 24H1 achieved revenue of 298.8 billion yuan, -10.65% year on year, 4.15 and 3.218 billion with non-net profit attributable to mother, -42.5% and -53.9% year-on-year, and non-recurring profit and loss of 0.931 billion, up 0.695 billion from year on year, mainly due to asset disposal income and impairment recovery; Q2 achieved revenue of 148.89 billion billion yuan, -21.6% year on year, and 1.47 and 0.55 after deduction of non-net profit billion, -61.75%, -85.13% YoY. Revenue was dragged down by the decline in general contracting and real estate business, and the decline in profit was mainly due to a drag on gross margin and an increase in impairment losses. Considering the strong downward pressure on real estate and the uncertainty of metal price fluctuations, we lowered the company's profit forecast. The company's net profit for 24-26 is 7.2, 7.87, and 8.69 billion (previous values were 10, 11.1, and 12.3 billion), corresponding to PE of 8.8, 8.1, and 7.3 times, maintaining the “buy” rating.

Real estate business gradually shrinks, and profitability declined slightly

By business, 24H1's engineering contracting/resource development/featured business/comprehensive real estate business achieved revenue of 2773.6, 3.29, 16.03, and 5.03 billion, respectively, -10.37%, -7.76%, -3.14%, and -35.39%. The real estate business gradually contracted under pressure, and the three active mines achieved a total net profit of 0.426 billion yuan. The gross margins of the above businesses were 8.5%, 25.29%, 14.85%, and 6.76%, respectively, -0.13, -9.16, -0.52, and -1.58pct, respectively. The gross margin of the resource development business declined due to fluctuations in commodity prices. The company's 24H1 comprehensive gross margin was 9%, -0.22pct year-on-year, and the Q2 quarterly gross margin was 9.92%, and +0.79pct year-on-year.

New orders declined year on year, and overseas business is expected to achieve rapid growth of 677.8 billion yuan in 24H1 new orders, -6.1% year over year, and the amount of new overseas contracts reached 43.54 billion yuan, +92.5% year over year, achieving a major breakthrough in overseas orders. New orders signed in Q2 in a single quarter were 360.85 billion yuan, -8.9% year over year, 24M1-7 new orders were 750.44 billion yuan, -6.4% year over year, and new overseas orders were 44.39 billion yuan, up 83% year over year. By business, 24H1 housing construction engineering, metallurgical engineering and operation, municipal engineering, and industrial manufacturing signed new orders of 3117, 101.9, 101.8, and 108.5 billion respectively, compared with -14.4%, +11%, -18.7%, and +24.9%. The housing and municipal engineering sectors are under pressure, and the metallurgical engineering sector is growing steadily.

Impairment losses have increased, and cash flow needs to be improved

The cost rate for the 24H1 period was 5.29%, +0.46pct year on year. The sales, management, R&D, and finance cost ratios were +0.05, +0.29, -0.02, and +0.14pct, respectively, and the expenses were not effectively diluted. Asset and credit impairment losses were 4.866 billion yuan, up 1.784 billion yuan year on year. Under the combined influence, the company's 24H1 net interest rate was 1.57%, -1.02pct year on year, and the Q2 net interest rate was 1.04%, -1.21pct year on year. The company's net operating cash flow outflow in the first half of '24 was 28.4 billion, an increase of 13.9 billion over the previous year. The current payment ratio was 64% and 72%, respectively, -6.37 pct and -0.91 pct year on year. The accounts receivable turnover ratio was 1.9 times, down 1.3 times year on year.

Risk warning: Infrastructure investment growth falls short of expectations, risk of large fluctuations in metal prices, demand for high-nickel batteries falling short of expectations, risk of accidents in mining project operations, and geopolitical risks.