Business was steady in the first half of the year, and profit increased year-on-year

The company 24H1 achieved revenue of 145.977 billion, +1.11% year-on-year, +9.32% and +11.86% year-on-year, non-recurring profit and loss of 0.123 billion, a year-on-year decrease of 0.004 billion, of which Q2 achieved revenue of 71.24 billion billion in a single quarter, -8.86% year-on-year, and 0.536 and 0.553 billion yuan year-on-year + 7.26%, +12.09% Profit growth is mainly due to a decrease in asset and credit impairment losses and an increase in other earnings. Considering the rapid growth in overseas and new business orders, we slightly raised our profit forecast. We expect net profit to be 1.72, 1.93, and 2.2 billion (previous values were 1.7, 1.85, 2.03 billion) in 24-26, corresponding PE of 10.1, 9, and 7.9 times, adjusted to a “buy” rating.

The construction business increased steadily, and gross margins were under pressure for a short time

24H1 construction, design consulting, building materials industry, real estate development, and urban construction investment achieved revenue of 1318.52, 15.96, 6.997, 1.353, and 0.653 billion, respectively, +3.16%, -8.85%, -7.96%, -62.04%, and -5.64%, respectively. Construction led to revenue growth, with gross margins of 6.38%, 13.41%, 12.83%, 9.98%, 88.21%, -0.16, -8.52, -4.11, + 8.10, -5.87pct.

The gold sales business achieved revenue of 0.372 billion yuan, -12.16% year over year, gold sales volume of 0.0238 million ounces, -24.88% year over year, gross profit margin of 38.33%, and -7.03pct year on year. The 24H1 comprehensive gross margin was 7.6%, -0.47pct year on year, and the Q2 quarterly gross margin was 9.15%, and -0.48pct year on year.

New orders increased slightly, and the growth rate of new overseas orders was impressive

24H1 signed 206.6 billion new orders, +0.59% year over year. By business, construction, design consulting, building materials industry, and real estate development signed new orders of 1733.84, 11.103, 14.837, and 4.11 billion yuan, respectively, +4.44%, +0.44%, and -34.47% year-on-year. The share of business in the Yangtze River Delta region reached 84%, with new orders of 156.9, 47, and 2.8 billion yuan in the Shanghai market, foreign port market, and overseas markets, or +9.95%, -22.57%, and +40% over the same period. New orders in overseas markets increased significantly. Emerging businesses are booming. The six major emerging businesses signed new contracts worth 53 billion yuan in the first half of the year, accounting for 26% of new orders in the first half of the year. Among them, new contracts for water conservancy and industrial construction changed +78% and +25% year-on-year, and the water sector is very prosperous.

The overall fee control effect is good, and cash flow needs to be improved

The cost rate for the 24H1 period was 6.33%, -0.42pct year-on-year. Year-on-year changes in sales, management, R&D, and financial expense ratios -0.06pct, +0.03pct, -0.30pct, -0.10pct. Total asset and credit impairment losses were $0.235 billion, down 0.296 billion yuan year on year, fair value change losses increased 0.22 billion year on year, and other income increased 0.104 billion year on year, mainly due to increased government subsidies. Net interest rate rose 0.04 pct to 0.61% year on year under the combined influence. Net interest rate for the Q2 single quarter was 0.79%, +0.06 pct year on year. The net CFO of 24H1 was -22.62 billion, with a year-on-year increase of 9.462 billion. The current payout ratios were 118.27% and 132.36%, respectively, with year-on-year changes of +15.31pct and +20.21pct.

Risk warning: Infrastructure investment is weaker than expected; order execution falls short of expectations; project construction falls short of expectations; overseas market risk.