Revenue remained steady, and both performance and orders increased. In 24Q1, the company achieved net profit of 6.14 billion yuan to mother, an increase of 10.0% year-on-year. In 24Q1, the company signed a new contract amount of 507.3 billion yuan, +10.8% year-on-year, including 91.2 billion yuan of new overseas contracts, an increase of 9.4% over the previous year.

Domestic: Lay out an effective market for water conservancy investment, optimize operating assets, and reduce the scale of investment. ① Join forces with Chongqing Water Investment to lay out water conservancy and improve the service capabilities of the entire industry chain. In 2023, the Chongqing Water Resources and Hydropower Institute and Hongyu Company were controlled through mergers and acquisitions to lay out the investment, design, construction and operation business of water conservancy and hydropower projects. ② The increase in the proportion of urban integrated projects drives faster asset operation turnover and improved profitability. In 20-23, the average operating cycle of newly signed major asset operation projects was reduced from 21 to 10 years, and free cash flow improved from a net outflow of 55.2 billion yuan to a net inflow of 33.5 billion yuan.

Overseas: New signings continue to be booming, strengthening exchanges in the Middle East, Africa, and Southeast Asia. In 24Q1, a new overseas order of 91.2 billion yuan was signed, with a high base of +9.4% compared to the same period last year. 24H1, management had frequent exchanges with Vietnam, Saudi Arabia, Ethiopia and other countries. Jointly with China Hydropower, a subsidiary of CCCC Group, to invest in overseas power assets. In June 2024, CCCC Changjiang Construction and China Hydropower signed a strategic cooperation agreement and a construction supervision service contract for the Lucaiwei Hydropower Project in Chile.

State-owned enterprise reform: ① Implement equity incentives. The assessment requirements are based on 21 years, with a net profit CAGR of at least 8%/8.5%/9% for 23-25, and a weighted average ROE of at least 7.7%/7.9%/8.2%, respectively; ② Spin-off design and listing by CCCC. 24H1, CCCC Design expects to achieve net profit of 0.62-0.64 billion yuan, +161%-169% year-on-year; ③ Focus on shareholder returns. Increase the dividend rate to 20% in 2023.

The closing price on July 16 corresponds to a dividend rate of 3.52%, ranking third among the top eight construction central enterprises.

Profit forecasting and investment advice. The company's net profit for 2024-2026 is estimated to be 25.7/27.7/29.9 billion yuan, respectively, giving the company a 24-year PE valuation of 6.5 times, corresponding to a reasonable value of 10.27 yuan/share for A shares and a reasonable value of HK$5.48 per share for H shares, maintaining the “buy” rating unchanged.

Risk warning: Infrastructure investment falls short of expectations; overseas business falls short of expectations; funding falls short of expectations.