Event: The company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 194.262 billion yuan, a year-on-year increase of 1.11%; net profit to mother was 2.782 billion yuan, an increase of 4.67% year-on-year.

Revenue from the survey design and consulting business grew rapidly, and engineering construction increased steadily. With 2024H1, the company achieved revenue of 194.262 billion yuan, up 1.11% year on year; among them, engineering construction revenue was 164.983 billion yuan, up 2.9% year on year; industrial manufacturing revenue was 14.643 billion yuan, down 5.33% year on year; investment and operating income was 13.14 billion yuan, down 11.19% year on year; and survey design and consulting business revenue was 7.812 billion yuan, up 22.65% year on year. Domestic business revenue was 166.142 billion yuan, down 0.29% year on year; overseas business revenue was 28.12 billion yuan, up 10.33% year on year. The company achieved net profit of 2.782 billion yuan, a year-on-year increase of 4.67%; realized deduction of non-net profit of 2.328 billion yuan, a year-on-year decrease of 0.89%. The company achieved a net cash flow of 14.515 billion yuan from operating activities, an increase of 0.883 billion yuan over the previous year.

The gross margin and period expense ratio have increased. 2024H1's gross margin was 12.19%, up 1.26pct year on year; net margin was 2.34%, down 0.02pct year on year. The cost rate for the period was 8.22%, an increase of 0.94 pct over the previous year. The sales expense ratio was 0.52%, up 0.08pct year over year. The management fee rate was 3.65%, an increase of 0.11pct over the previous year. The financial expense ratio was 1.57%, up 0.43pct year over year. The R&D cost rate was 2.48%, an increase of 0.31pct over the previous year. The company's balance ratio was 77.39%, up 1.56 pcts year over year.

Accounts receivable for the first half of the year were $94.305 billion, an increase of $9.862 billion.

The number of new contracts signed in industrial manufacturing is growing at a high rate. 2024H1, the company signed a new contract of 738.601 billion yuan, an increase of 14.35% over the previous year. Among them: 563.22 billion yuan of new contracts were signed domestically, up 15.81% year on year; new contracts signed abroad were 175.381 billion yuan, up 9.90% year on year. By business type, new contracts for engineering construction were 656.43 billion yuan, up 6.75% year on year. Among them, new energy and integrated smart energy contracts were signed at 293.315 billion yuan, up 5.09% year on year; new contracts signed for survey design and consulting business were 11.45 billion yuan, down 4.07% year on year; new industrial manufacturing contracts were signed at 60.328 billion yuan, up 358.64% year on year. Investment suggestions: The company's net profit for 2024-2026 is expected to be 8.957, 10.002, and 11.16 billion yuan were +12.16%/+11.67%/+11.57%, respectively. The corresponding P/E was 9.63/8.63/7.73x, 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.