Event: The company publishes its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 31.731 billion yuan, a year-on-year increase of 0.7%; net profit to mother was 2.06 billion yuan, an increase of 2.9% over the previous year.

Performance improved steadily as scheduled. With 2024Q1-3, the company achieved revenue of 31.731 billion yuan, an increase of 0.7% year on year; achieved net profit of 2.06 billion yuan, an increase of 2.9% year on year; realized deducted non-net profit of 2.051 billion yuan, an increase of 2.21% year on year. The company achieved a net cash flow of -0.26 billion yuan from operating activities, an increase of 0.246 billion yuan over the previous year. The company's accounts receivable were $11.526 billion, an increase of $1.057 billion over the previous year.

The gross margin has increased, and the balance to debt ratio has declined. 2024Q1-3, the company's gross margin was 18.86%, up 0.24pct year on year; net margin was 6.85%, down 0.03pct year on year. The cost rate for the period was 10.41%, an increase of 0.55pct over the previous year. The sales expense ratio was 1.15%, a year-on-year decrease of 0.01 pct. The management fee rate was 4.78%, an increase of 0.6 pct over the previous year. The financial expense ratio was 0.88%, up 0.41pct year over year. The R&D expenditure rate was 3.61%, a year-on-year decrease of 0.44pct. Diluted ROE was 10.17%, down 0.86pct year over year.

The company's balance ratio was 61.04%, a year-on-year decrease of 0.78pct.

There has been a steady increase in new contracts signed, and there has been a high increase in new contracts signed for mine operation and maintenance. From January to September 2024, the company signed a new contract of 52.788 billion yuan, an increase of 1% over the previous year. Among them, new contracts for engineering technology services were 33.625 billion yuan, a year-on-year decrease of 6%; new contracts for high-end equipment manufacturing were 4.985 billion yuan, a year-on-year decrease of 7%; and 1.057 billion yuan of new contracts were signed for other businesses, a year-on-year decrease of 31%. Production and operation services signed a new contract of 13.12 billion yuan, an increase of 36% over the previous year. A new contract for mine operation and maintenance in production and operation services was 8.191 billion yuan, an increase of 45% over the previous year; a new contract of 2.082 billion yuan was signed for cement operation and maintenance, an increase of 4% over the previous year. Domestic business signed new contracts of 22.584 billion yuan, a year-on-year decrease of 5%, and the growth rate of new contracts for production and operation services was faster; new contracts signed overseas were 30.204 billion yuan, an increase of 6% over the previous year, and the growth rate of new contracts signed by high-end equipment manufacturing was relatively fast. The company has taken on 347 production lines in 89 overseas countries and regions, and the main cement technology, equipment and engineering industry has maintained the world's largest market share for 16 consecutive years. The company unswervingly implements an international development strategy, makes full use of both international and domestic markets and resources, and has great potential for future development.

Investment advice: The company's net profit for 2024-2026 is estimated to be 3.215/3.743/4.282 billion yuan, respectively, +10.27%/+16.41%/+14.40% compared to the same period, and the corresponding P/E is 8.43/7.24/6.33 times. Maintain a “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.