Revenue remains stable, and the leading position in transportation infrastructure is stable

The company achieved revenue of 536.6 billion in the first three quarters of 24, -2.3% year on year, 16.27 billion and 13.52 billion with return to mother and non-net profit, respectively, -0.61% and -11.45% year on year, and non-recurring profit and loss was 2.75 billion billion, up 1.78 billion year on year; Q3 achieved revenue of 179.2 billion yuan, -1.73% year on year, 4.88 and 2.9 billion yuan year-on-year, -0.65% year-on-year, - At 32.9%, non-recurring profit and loss in a single quarter was 1.98 billion, up 1.45 billion yuan year on year. Net investment income in Q3 was 0.87 billion, up 0.95 billion from year on year, mainly due to disposal of subsidiary equity income. The slow growth rate after deducting non-profit in Q3 was mainly due to a decline in gross margin and failure to dilute expense ratios.

New orders are growing steadily, and the growth rate of emerging businesses is impressive

The amount of new orders signed by 24Q1-3 was 1280.456 billion yuan, +9.28% year over year, of which new orders were 319.589 billion yuan in a single quarter in Q3, +12.12% year over year. By business, 24Q1-3 infrastructure construction/infrastructure design/dredging projects were newly signed at 1149.45/38.716/84.209 billion yuan respectively, up 10.04%/+6.74%/+9.28%, respectively. The main traditional infrastructure construction industry maintained high growth. Among them, infrastructure construction/infrastructure design/dredging projects in the Q3 single quarter were newly signed at 286.072/6.06/24.526 billion yuan, respectively, +12.07%/-36.1%/+65.48%, respectively. The main increase in road and bridge construction and urban construction was +48.29%/+14.7% in the Q3 single quarter, respectively, to 61.4/140.4 billion yuan. New overseas orders were 265.162 billion in the first three quarters, up 24.66% year on year, accounting for about 21% of the company's new contract amount. The growth rate of overseas orders was impressive. The company accelerated the construction of an emerging business pattern, increased its efforts to develop emerging business markets, and actively built new quality productivity characteristic of CCCC. In the first three quarters, new contracts were signed in the emerging business sector of 390 billion yuan, an increase of 27% over the previous year.

Q3 Gross margin was slightly pressured, and return on investment increased performance

The 24Q1-3 comprehensive gross margin was 11.5%, +0.28pct year on year, and the Q3 single quarter gross margin was 11.3%, -0.96pct year on year. The cost rate for the first three quarters was 6.14%, +0.28pct. Among them, sales/management/R&D/finance expenses were 0.38%, 2.26%, 3.25%, and 0.24%, respectively, +0.09, +0.03, +0.1, and +0.06 pct. The expenses were not effectively diluted. Asset and credit impairment losses in the first three quarters were 3.077 billion, up 0.156 billion from the previous year, of which credit impairment increased 0.258 billion. Investment income for the first three quarters was 0.976 billion, up 1.162 billion yuan year on year, and net income from fair value changes increased 0.56 billion year on year. Under the combined influence, the company's net interest rate for the first three quarters was 3.9%, +0.13 pct year on year. The net interest rate for the Q3 single quarter was 3.61%, +0.18 pct year on year.

Optimistic about the company's cash flow improvement throughout the year and maintaining a “buy” rating

The net operating cash outflow from 24Q1-3 was 77.03 billion, an increase of 27.2 billion yuan over the previous year, and the net operating cash outflow for the Q3 quarter was 2.87 billion, a significant improvement over the previous quarter. Considering the rise in fiscal stimulus expectations in the fourth quarter, the incremental debt conversion policy continues to advance, and the fourth quarter is about to enter the peak repayment period, we are optimistic that the company's cash flow will improve throughout the year. We expect the company's net profit to be 25.2, 27.8, and 31.1 billion for 24-26, corresponding PE of 6.6, 6.0, and 5.4 times, maintaining a “buy” rating.

Risk warning: Infrastructure investment is weaker than expected, risk of impairment, and implementation of REITs supporting policies falls short of expectations.