Event: The company publishes its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 536.636 billion yuan, a year-on-year decrease of 2.26%; net profit to mother was 16.274 billion yuan, a year-on-year decrease of 0.61%. The performance was in line with expectations. With 2024Q1-3, the company achieved revenue of 536.636 billion yuan, a year-on-year decrease of 2.26%; realized net profit to mother of 16.274 billion yuan, a year-on-year decrease of 0.61%; and realized deducted non-net profit of 13.52 billion yuan, a year-on-year decrease of 11.45%. The company achieved a net cash flow of -77.028 billion yuan from operating activities, an increase of 27.198 billion yuan over the previous year. The company's accounts receivable were 134.598 billion yuan, an increase of 14.795 billion yuan over the previous year.

Profitability has improved. 2024Q1-3, the company's gross margin was 11.54%, up 0.28pct year on year; net margin was 3.91%, up 0.12pct year on year. The cost rate for the period was 6.14%, an increase of 0.28pct over the previous year.

The sales expense ratio was 0.38%, up 0.08 pct year on year; the management expense ratio was 2.26%, up 0.03 pct year on year; the financial cost ratio was 0.24%, up 0.05 pct year on year; and the R&D expense ratio was 3.25%, up 0.1 pct year on year. Diluted ROE was 5.16%, down 0.45pct year over year. The company's balance ratio was 75.19%, an increase of 0.01pct over the previous year.

The signing of new contracts for urban construction and emerging businesses performed brilliantly, and overseas business grew rapidly. From January to September 2024, the company signed a new contract of 1280.456 billion yuan, an increase of 9.28% over the previous year. Among them, infrastructure construction business, infrastructure design business, dredging business, and other businesses were 1149.45 billion yuan, 38.716 billion yuan, 84.209 billion yuan, and 8.081 billion yuan, respectively, +10.04%/+6.74% +9.28%/-41.77%, respectively. The company stepped up its efforts to develop emerging business markets. 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. New contracts were signed for urban construction, etc. in infrastructure construction amounting to 612.786 billion yuan, an increase of 20.1% over the previous year. Overseas regions signed new contracts worth 265.162 billion yuan, an increase of 24.66% over the previous year, accounting for about 21% of the company's new contract amount. Among them, infrastructure construction business, infrastructure design business, dredging business, and other businesses were 258.979 billion yuan, 1.785 billion yuan, 3.5 billion yuan, and 0.898 billion yuan, respectively.

Investment advice: The company's net profit for 2024-2026 is estimated to be 24.008/24.771/26.843 billion yuan, respectively, +0.82%/+3.18%/+8.37% year-on-year, and the corresponding P/E is 7.49/7.26/6.69 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.