Reiterate "Buy" rating and maintain the TP at HK$3.10. We maintain the EPS forecasts for CSC Development (CSCD, the "Company") for 2024/ 2025/ 2026 at HK$0.338/ HK$0.445/ HK$0.541, respectively. We maintain the TP at HK$3.10, equivalent to 7.7x/ 6.0x/ 4.8x 2024/ 2025/ 2026 EV/EBITDA.
1Q2024 newly signed contracts increased 4.9% YoY to HK$3,697 million. 1) 1Q2024 revenue was HK$2,031 million (+17.7%), operating profit was HK$432 million (+30.8%), and newly signed contracts were HK$3,697 million (+4.9%). Backlog was HK$17,618 million (+16.4%) as at 31 March, 2024. 2) The Company maintained a dominant position in the Hong Kong and Macau markets, consistently receiving public infrastructure projects, also receiving new contracts in private projects such as Macau Rehabilitation Hospital and Sun Hung Kai West Kowloon Arts Plaza Building. 3) The Company continued to expand high-quality projects in the Chinese Mainland market, winning the bid for the world's largest indoor ski resort (Metal Roofing of Shenzhen Qianhai Huafa Ski Resort). 4) The Company has been steadily promoting overseas market expansion such as beginning biding work in Singapore. 5) The Company further promoted BIPV applications in Chinese Mainland market and Hong Kong market (Castle Peak Road Noise Barrier - Photovoltaic Transformation, in Hong Kong).
We expect total revenue, shareholders' net profit and new contracts of the Company to probably reach HK$25 billion, HK$3 billion and HK$35 billion, respectively, by 2030. Curtain wall business will remain the foundation of the Company, while BIPV and other emerging businesses with technology-driven emphasis will continue to increase in contribution.
Catalysts: 1) Inspection, maintenance and renovation of old facades may bring new business opportunities due to increased safety emphasis; 2) overseas markets such as Singapore and the Middle East countries may potentially make substantial revenue contribution.
Risks: 1) Government infrastructure spending may be lower than expected; 2) overseas project risks.
