SINOMA INTERNATIONAL ENGINEERING(600970):GROSS MARGIN AND CASH FLOW IMPROVE;OPERATION AND MAINTENANCE BUSINESS DELIVERS STRONGER GROWTH
SINOMA INTERNATIONAL ENGINEERING(600970):GROSS MARGIN AND CASH FLOW IMPROVE;OPERATION AND MAINTENANCE BUSINESS DELIVERS STRONGER GROWTH
Quality and growth of operation and maintenance business improved; overall performance encouraging. In 1H24, new contracts for operation and maintenance services rose 41% YoY to Rmb8,897mn, with new contracts for mine operation and maintenance growing 47% YoY to Rmb5,527mn. In 1H24, revenue from the operation and maintenance business rose 22% YoY to Rmb5,673mn, and gross margin rose 3.18ppt YoY to 21.93%. As of end-1H24, the firm had 348 mine operation and maintenance projects in operation (with ore supply up 9% YoY), and 62 cement operation and maintenance projects in operation (with annual production capacity of more than 100mnt).1H24 results in line with our expectationSinoma International Engineering (Sinoma) announced its 1H24 results: Revenue rose 1.7% YoY to Rmb20.90bn and net profit attributable to shareholders grew 2.3% YoY to Rmb1.40bn. In 2Q24, revenue rose 0.7% YoY to Rmb10.61bn, and net profit attributable to shareholders grew 1.6% YoY to Rmb763mn. The 1H24 results are in line with our expectations.
Sinoma International Engineering (Sinoma)宣佈1H24業績：營業收入同比增長1.7%至209億元人民幣，歸屬於股東的淨利潤同比增長2.3%至14億元人民幣。2Q24，營業收入同比增長0.7%至106.1億元人民幣，歸屬於股東的淨利潤同比增長1.6%至7.63億元人民幣。1H24業績符合我們的預期。
Engineering business maintained revenue growth despite headwinds; overseas expansion progressed rapidly. In 1H24, the firm's new engineering service contracts fell 18% YoY to Rmb24.15bn. Specifically, new domestic contracts rose 58% YoY to Rmb4.42bn, and new overseas contracts rose 4% YoY to Rmb19.73bn. In 1H24, revenue from engineering services rose 4.82% YoY to Rmb12.10bn, and gross margin rose 0.62ppt YoY to 15.54%.
工程業務在逆境中保持了收入增長，海外擴張進展迅速。1H24，公司新籤工程服務合同同比下降18%至241.5億元人民幣。具體來說，新籤國內合同同比增長58%至44.2億元人民幣，新籤海外合同同比增長4%至197.3億元人民幣。1H24，工程服務收入同比增長4.82%至121億元人民幣，毛利率同比增長0.62個百分點至15.54%。
Equipment business faced significant pressure, but market expansion efforts have paid off. In 1H24, the firm's new equipment contracts fell 15% YoY to Rmb3,344mn, with new domestic contracts down 33% YoY to Rmb2,103mn and overseas contracts up 58% YoY to around Rmb1,241mn. In 1H24, equipment business revenue fell 23.07% YoY to Rmb2.92bn, and gross margin fell 0.51ppt YoY to 23.25%. The self-sufficiency rate of 10 core equipment has exceeded 60%, and the company continued to expand equipment business overseas and in other sectors. In 1H24, 32% equipment revenue came from overseas markets, and 49% from other sectors.
設備業務面臨重大壓力，但市場拓展工作取得了回報。1H24，公司新籤設備合同同比下降15%至33.44億元人民幣，其中新籤國內合同同比下降33%至21.03億元人民幣，新籤海外合同同比增長58%至約12.41億元人民幣。1H24，設備業務收入同比下降23.07%至29.2億元人民幣，毛利率同比下降0.51個百分點至23.25%。10大核心設備的自給率已超過60%，公司繼續在境外和其他領域擴大設備業務。1H24，32%的設備收入來自海外市場，49%來自其他領域。
Quality and growth of operation and maintenance business improved; overall performance encouraging. In 1H24, new contracts for operation and maintenance services rose 41% YoY to Rmb8,897mn, with new contracts for mine operation and maintenance growing 47% YoY to Rmb5,527mn. In 1H24, revenue from the operation and maintenance business rose 22% YoY to Rmb5,673mn, and gross margin rose 3.18ppt YoY to 21.93%. As of end-1H24, the firm had 348 mine operation and maintenance projects in operation (with ore supply up 9% YoY), and 62 cement operation and maintenance projects in operation (with annual production capacity of more than 100mnt).
運營和維護業務質量和增長得到了改善，整體表現令人鼓舞。1H24，公司運營和維護服務的新籤合同同比增長41%至88.97億元人民幣，其中礦山運營和維護的新籤合同同比增長47%至55.27億元人民幣。1H24，運營和維護業務的收入同比增長22%至56.73億元人民幣，毛利率同比增長3.18個百分點至21.93%。截至1H24年底，公司運營着348個礦山運營和維護項目（礦石供應同比增長9%），以及62個水泥運營和維護項目（年產能超過1億噸）。
Expense ratio rose on FX rate fluctuations. In 1H24, selling, G&A, and financial expense ratios rose 0.07ppt, 0.59ppt, and 0.73ppt YoY, as the firm recognized Rmb217mn FX losses in 1H24. Cash flows remained strong. Net operating cash flow totaled Rmb885mn in 1H24 (vs. - Rmb940mn a year earlier), as the firm strengthened contract settlement and payment collection.
外匯匯率波動導致費用比率上升。在2024年上半年，銷售、總務和財務費用比率同比分別上升0.07ppt、0.59ppt和0.73ppt，因公司在2024年上半年確認人民幣217百萬元的外匯損失。現金流保持強勁。運營淨現金流在2024年上半年達到人民幣885百萬元（去年同期爲人民幣-940百萬元），因公司加強了合同結算和收款。
Trends to watch
需要注意的趨勢
Business model improving; strong growth potential. We expect the firm's engineering business to maintain stable volume given easing impact from domestic projects, and stable demand for technological upgrading, and overseas new project demand. We also expect penetration rate of its equipment business to increase, boosting revenue and profit contribution. The firm's operation and maintenance (O&M) business has been growing rapidly recently, and we believe safety and environmental requirements for mine operation and strong demand for cement operation and maintenance will continue to drive the firm's O&M business to grow. We see strong growth potential in the medium-to-long term, and see upside in gross margin.
業務模式改善；增長潛力強勁。我們預計公司的工程業務將保持穩定的成交量，因爲國內項目影響減弱，技術升級需求穩定，境外新項目需求穩定。我們還預計其設備業務的滲透率將增加，提升營收和利潤貢獻。公司的運維業務最近增長迅速，我們相信礦山運營的安全和環境要求以及水泥運營和維護的強勁需求將繼續推動公司的運維業務增長。我們看到長期中期的增長潛力，並看到毛利率上升空間。
Financials and valuation
財務和估值。
We leave our 2024 and 2025 attributable net profit forecasts unchanged at Rmb3,415mn and Rmb3,900mn. The stock is now trading at 7.4x 2024 and 6.5x 2025e P/E. We maintain an OUTPERFORM rating and target price of Rmb14.7, implying 11.4x 2024e and 10.0x 2025e P/E, offering 54% upside.
我們維持對2024和2025年的淨利潤預測不變，分別爲人民幣3,415百萬元和人民幣3,900百萬元。目前股票的2024和2025年市盈率分別爲7.4倍和6.5倍。我們保持超越市場的評級和目標價爲人民幣14.7元，暗示2024年市盈率爲11.4倍和2025年市盈率爲10.0倍，提供54%的上行空間。
Risks
風險
Disappointing growth of equipment and operation & maintenance business; slower-than-expected progress in contract execution.
設備和運維業務增長不及預期；合同執行進展較慢，令人失望。
譯文內容由第三人軟體翻譯。
