A leading engineering consulting and testing enterprise in East China. The company mainly engages in engineering consulting, inspection and environmental low-carbon technology services. In 2023, the company's engineering consulting business revenue accounted for 54.54%, inspection and testing revenue for 29.92%, environmental low-carbon technology service revenue for 11.02%, special engineering and product sales revenue for 3.92%, and other business revenue for 0.6%. The actual controllers of the company are the Shanghai State-owned Assets Administration Commission and the Shanghai State-owned Assets Administration Commission holding a total of 51.26% of the shares. Shanghai Guosheng Group holds 28.11% of the shares, Shanghai Shangshi Group holds 19.52% of the shares, and Shanghai City Investment Holdings holds 7.81% of the shares. In 2023/2024H1, the company achieved operating income of 4.009/1.65 billion yuan, an increase of 12.7%/4.17%, respectively. The company achieved net profit of 0.316/0.077 billion yuan, a year-on-year increase of 14.57%/16.51%, respectively. The company's performance has been improving steadily.

The engineering consulting industry is highly competitive and highly fragmented. In 2023, the revenue of engineering survey companies was 108.59 billion yuan, an increase of 0.8%; engineering design revenue was 564.05 billion yuan, an increase of 0.2%; new engineering survey contracts were signed at 145.55 billion yuan, a decrease of 2.3%; and new engineering design contracts were signed at 729.05 billion yuan, an increase of 0.2%. The number of engineering survey and design companies increased by 6.5%, and competition in the industry is fierce. The market share of leading companies is only 1.4%, and the industry is quite scattered. The engineering supervision industry signed a new contract of 202.42 billion yuan in 2023, down 1.6%. The leading market share was less than 1%, and the industry was scattered. The number of institutions above the size of the inspection and testing industry accounts for 14.04%, but the revenue share is 80.32%, and the trend of increasing concentration is remarkable. In 2023, the company's inspection and testing revenue was 1.2 billion yuan, and the market share was only 1.57%, so there is plenty of room for growth in the future.

Low-altitude economic development has great potential, and the inspection of old houses opens up room for growth. According to the “Implementation Plan for Innovative Application of General Aviation Equipment (2024-2030)” issued by four departments including the Ministry of Industry and Information Technology, general aviation equipment will form a trillion dollar market by 2030. The company focuses on the fields of low-altitude economy and full-space unmanned systems to promote the integrated development of the low-altitude economy and rail transit. The Ministry of Housing and Construction first proposed housing for the elderly, and housing safety inspections first. If old housing tests are carried out according to an average of 7-12 yuan/square meter in the next 20 years, the market space for old house testing is about 90.244-154.704 billion yuan. The company is a leading construction engineering inspection leader in East China. Housing safety inspection has great potential. Investment suggestions: there is plenty of room to increase the urbanization rate of household registration, old housing inspection helps growth, and there is great potential for the low-altitude economy. The company's net profit for 2024-2026 is expected to be 0.347/0.387/0.434 billion yuan, respectively, +10.03%/+11.33%/+12.25% over the same period, and the corresponding PE is 18.62/16.72/14.90 times. The recommended “Recommended” rating is covered for the first time.

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