On October 30, the company released its three-quarter report. 24Q1-Q3 achieved revenue of 20.539 billion yuan, -5.56% year over year; net profit to mother of 1.319 billion yuan, -11.25% year over year.

Among them, Q3 achieved revenue of 6.561 billion yuan, or -4.21% year-on-year; realized net profit to mother of 0.384 billion yuan, or -20.88% year-on-year.

The year-on-year decline in revenue was narrower than in Q2, and contract debt reached a record high. We are optimistic about long-term revenue growth.

According to the company announcement, 3Q24 achieved revenue of 6.561 billion yuan, -4.21% year-on-year, and the decline narrowed compared to Q2. As of the end of the third quarter of '24, the company's contract debt reached 9.017 billion yuan, up 0.694 billion yuan from the end of the second quarter, a record high in 23 years. We are optimistic about the long-term growth of the company's revenue.

Orders for construction machinery and services increased, and new overseas orders continued to grow. According to the company's announcement, the company signed a new order of 37.328 billion yuan from January to September 2024. By business, the tunnel construction equipment and related service business was 8.075 billion yuan, down 23.25% year on year; special construction machinery equipment and related service business was 2.124 billion yuan, up 34.1% year on year; turnout business was 5.515 billion yuan, down 8.85% year on year; steel structure manufacturing and installation business was 19.05 billion yuan, up 3.87% year on year. . In terms of domestic and foreign sales, according to the Wind investor interactive platform, the company has ranked first in the world in terms of shielder/TBM production and sales for 7 consecutive years. It is the enterprise with the largest number of shielders/TBM exported overseas in China and the highest market share. From January to September 2024, the company signed new overseas orders of 2.204 billion yuan, an increase of 4.72% over the previous year. The company's engineering and construction machinery and service business orders have increased rapidly, and new overseas orders have continued to rise. We are optimistic about the long-term growth of the company's revenue.

Railway investment continues to grow+equipment renewal policy support, and we are optimistic about the release of the company's transportation equipment business demand. According to the State Railway Administration, the national railway fixed asset investment in 23 was 764.5 billion yuan, +7.5% year on year; 1-9M24 national railway fixed asset investment was +10.3% year over year, and the investment amount accelerated. Furthermore, in 2024, the executive of the State Council reviewed and approved the “Action Plan to Promote Large-scale Equipment Renewal and Trade-in of Consumer Goods”. The conference stated that fiscal, taxation, and financial policy support should be increased to promote the upgrading and transformation of transportation equipment in an orderly manner. Encouraged by the policy, the pace of transportation equipment renewal and replacement is expected to accelerate, which is beneficial to the long-term revenue growth of the company's transportation equipment business such as turnouts.

Profit Forecasts, Valuations, and Ratings

In 2024-2026, we expect the company's revenue to be 31.417/33.067/34.747 billion yuan, net profit to mother of 1.826/1.955/2.103 billion yuan, and the corresponding PE is 10/9/9X, maintaining a “buy” rating.

Risk warning

Downstream infrastructure investment falls short of expectations, expansion of new downstream sectors of shield machines falls short of expectations, and the risk of rising raw material prices