Reiterate the “buy” and maintain the target price at HK$15.00. We maintain China Construction International's (“Company”) earnings forecast per share for 2024/2025/2026 at HK$2.028/ HK$2.266/HK$2.503, respectively. We maintain a target price of HK$15.00, which is equivalent to 7.2x/ 7.1x/ 6.9x 2024/2025/2026 EV/EBITDA.
The number of new contracts signed in the first quarter of 2024 increased 69.6% year over year to HK$80.9 billion. 1) Revenue for the first quarter of 2024 was HK$24.17 billion (up 11.7% year on year), operating profit was HK$3.91 billion (up 15.1% year on year), and new contracts signed were HK$80.9 billion (up 69.6% year on year). As of March 31, 2024, active contracts were HK$394.95 billion (up 24.0% year over year). 2) The company formed a consortium with Veolia Group to win the bid for the West New Territories landfill expansion project. The total contract value reached HK$61.1 billion, while the contract value attributable to the company was HK$42.7 billion, making it the largest engineering project in the company's history.
After completion, the project can provide about 76 million cubic meters of landfill capacity, making it the largest landfill in Hong Kong. 3) MIC projects continue to advance in the mainland market, including the first high-rise concrete MIC project in Shandong Province (Qingdao Optoelectronics Industrial Park employee dormitory) and the second talent housing MIC project in Shenzhen (police apartment on the site of the former Vehicle Administration Office in Futian District). 4) The target total value of new contracts signed in 2024 is not less than HK$210 billion (up 11.7% year over year).
Catalysts: 1) Construction of the Shenzhen Green and Low-carbon Intelligent Building Base Project has officially commenced; 2) The company, along with other construction companies, won the bid for the Hong Kong New Territories West Landfill Expansion Project, with a total contract value of HK$61.1 billion, which is the largest single contract amount in the company's history.
Risks: 1) Government infrastructure spending may fall short of expectations; 2) Overseas project risk.