We have reaffirmed our “buy” rating and maintain our target price of HK$3.10. We slightly lowered China Construction Industrial's 2024/2025 earnings forecast by 2.3%/2.8% to HK$0.338/HK$0.445, respectively, and gave a 2026 earnings forecast of HK$0.541. We maintain our target price of HK$3.10, which is equivalent to 7.7x/ 6.0x/ 4.8x EV/EBITDA for 2024/2025/2026.

In 2023, shareholders' net profit increased 37.6% year over year to HK$580 million, and the results were in line with expectations. Total revenue in 2023 increased 13.0% year over year to HK$8.666 billion, including façade engineering business increased 15.2%, general contracting engineering business increased 17.7%, and operation management business decreased 4.3%. The total number of new contracts signed was HK$11.01 billion, up 13.6% year on year. Among them, curtain wall engineering business decreased by 1.2%, contract engineering business increased by 291.8%, and operation management business decreased by 4.8%. As of December 31, 2023, the total number of orders in hand increased 21.2% year over year to HK$16.239 billion, including a 12.8% increase in façade engineering business, 79.8% increase in general contract engineering business, and 8.6% increase in operation management business.

Significant progress has been made in all markets. In the Hong Kong market in China, the company has begun a project in the northern metropolitan area, successfully won bids for major cultural venues and the Hong Kong-Shenzhen Innovation and Technology Park, and has benefited from a ten-year hospital development plan and received important orders such as Gellianghong Hospital. In the Macau market in China, gaming companies are expanding their non-gaming investments, providing new opportunities for the façade engineering business. In mainland China, the company has entered the Beijing market and strengthened its business in Shenzhen through the “Zero Energy Building Pilot Project”, while focusing on delivering high-quality benchmark projects to enhance its high-end brand image and profitability.

We expect the company's total revenue, net shareholders' profit and newly signed contracts to reach HK$25 billion, HK$3 billion and HK$35 billion respectively by 2030. The curtain wall engineering business will continue to be the company's main business, and the contribution of photovoltaic building integration and other technology-driven emerging businesses will continue to increase.

Catalysts: 1) Due to greater emphasis on safety issues, inspection, maintenance, and refurbishment of old facades may bring new business opportunities; 2) Overseas markets such as Singapore and Middle Eastern countries may bring significant revenue contributions.

Risks: 1) Government infrastructure spending may fall short of expectations; 2) Overseas project risks.