We lower the TP to HK$1.20, downgrade to "Accumulate". We lower the EPS forecasts for Broad Homes (the "Company") in 2024/ 2025/ 2026 to -RMB0.931/ -RMB0.855/ -RMB0.769, respectively. We lower the TP to HK$1.20, equivalent to 16.2x/ 15.4x/ 13.3x 2024/ 2025/ 2026 EV/EBITDA.

1H2024 shareholders' net profit was -RMB301 million. Total revenue decreased 10.1% YoY to RMB844 million in 1H2024, in which PC unit manufacturing was RMB767 million (-6.1%), PC equipment manufacturing was RMB0.07 million (-89.2%), modular integrated product manufacturing was RMB47 million (+58.0%), and digital EPC was RMB30 million (-66.8%).

Total new contracts decreased 44.9% YoY to RMB965 million in 1H2024, in which PC unit manufacturing was RMB809 million (-45.3%), modular integrated product manufacturing was RMB80 million (+76.3%), and digital EPC was RMB77 million (-66.0%).

Development in different segments are gradually proceeding. 1) PC units remained the foundation business and the Company will continue to serve projects with high-quality cash flow; 2) the Company transitioned from a traditional construction company to a technology-driven enterprise, and will focus on digital operations and product-oriented development to enhance its competitive edge. Specifically, the digital EPC business will capitalize on significant opportunities in the "campus + industrial park" and urban renewal sectors, to drive future growth; 3) modular integrated product manufacturing business has demonstrated solid growth, and will poise for further expansion, particularly as the Company targets overseas markets and aims to achieve larger-scale revenue.

Catalysts: 1) Government support for prefabricated construction; 2) expansion into overseas markets.

Risks: 1) Government infrastructure spending may be lower than expected; 2) overseas project risks.