METALLURGICAL CORPORATION OF CHINA(601618):3Q24 IMPAIRMENT WRITE-BACK BOOSTS PROFIT;OVERSEAS NEW ORDERS GROW RAPIDLY
METALLURGICAL CORPORATION OF CHINA(601618):3Q24 IMPAIRMENT WRITE-BACK BOOSTS PROFIT;OVERSEAS NEW ORDERS GROW RAPIDLY
The write-back of heavy impairment losses, coupled with lower income tax expenses, supported net margin. The firm wrote back about Rmb569mn of asset and credit impairment losses in 3Q24 (vs. a net loss of Rmb932mn a year earlier), which we think may indicate sufficient impairment provisions. In 3Q24, the firm's income tax expense fell by Rmb730mn YoY to Rmb237mn, which also contributed significantly to its net profit. In 3Q24, the attributable net profit margin rose 1.6ppt YoY to about 2.4%.3Q24 results beat our expectations
第3季度24財年結果超出我們的預期
Metallurgical Corporation of China (MCC) announced its 1-3Q24 results: Revenue fell 11.7% YoY to Rmb412.6bn and attributable net profit fell 16.5% YoY to Rmb6.83bn. In 3Q24, revenue fell 14.4% YoY to Rmb113.8bn, and net profit attributable to shareholders grew 177.5% YoY to Rmb2.68bn. The firm's 3Q24 results beat our expectations, mainly due to the write-back of large impairment losses in 3Q24.
中國中冶（MCC）宣佈其2024年1-3季度業績：營業收入同比下降11.7%至4126億元人民幣，淨利潤同比下降16.5%至68.3億元人民幣。2024年第三季度，營業收入同比下降14.4%至1138億元人民幣，歸屬於股東的淨利潤同比增長177.5%至26.8億元人民幣。公司2024年第三季度業績超出我們的預期，主要是由於在2024年第三季度大額減值損失的計提被撤銷。
Gross margin fell slightly; expense ratio rose. The firm's blended gross margin (GM) fell 0.2ppt YoY to about 9.0% in 1-3Q24, and fell 0.1ppt YoY to around 9.0% in 3Q24. This, coupled with the widening revenue decline in 3Q24, may reflect pressure on project settlement, in our view. In 1- 3Q24, the firm's selling, G&A, and financial expense ratios rose 0.1ppt, 0.3ppt, and 0.1ppt YoY, while the R&D expense ratio fell 0.02ppt YoY. In 3Q24, selling, G&A, R&D and financial expense ratios expanded 0.1ppt, 0.2ppt, 0.02ppt and 0.1ppt YoY.
毛利率略有下降；費用率上升。公司2024年1-3季度總體毛利率同比下降0.2個百分點至約9.0%，2024年第三季度同比下降0.1個百分點至約9.0%。這與2024年第三季度營收下降幅度擴大可能反映出在我們看來項目結算方面的壓力。2024年1-3季度，公司的銷售、管理和行政費用以及財務費用率同比上升0.1個百分點、0.3個百分點和0.1個百分點，而研發費用率同比下降0.02個百分點。2024年第三季度，銷售、管理和行政、研發以及財務費用率同比擴大0.1個百分點、0.2個百分點、0.02個百分點和0.1個百分點。
The write-back of heavy impairment losses, coupled with lower income tax expenses, supported net margin. The firm wrote back about Rmb569mn of asset and credit impairment losses in 3Q24 (vs. a net loss of Rmb932mn a year earlier), which we think may indicate sufficient impairment provisions. In 3Q24, the firm's income tax expense fell by Rmb730mn YoY to Rmb237mn, which also contributed significantly to its net profit. In 3Q24, the attributable net profit margin rose 1.6ppt YoY to about 2.4%.
大幅減值損失的撤銷以及較低的所得稅支出支持了淨利率。公司2024年第三季度將約5.69億元人民幣的資產和信用減值損失計提撤銷（去年同期淨損失9.32億元人民幣），我們認爲可能表明充足的減值準備金。2024年第三季度，公司的所得稅支出同比減少7.3億元人民幣至2.37億元人民幣，也對其淨利潤貢獻顯著。2024年第三季度，歸屬於股東的淨利潤率同比上升1.6個百分點至約2.4%。
Net cash outflow continued; cash flow improved notably in 3Q24. In 1- 3Q24, the firm's net operating cash flow was about -Rmb30.7bn (vs. - Rmb22.5bn in the same period last year). However, the firm's net operating cash flow was about -Rmb2.33bn in 3Q24 (vs. -Rmb7.96bn in the same period last year), implying a sharp decline in net outflows. We believe this may be due to the firm's improved management of payment collection.
淨現金流繼續爲負；2024年第三季度現金流顯著改善。2024年1-3季度，公司的淨經營現金流約爲負307億元人民幣（去年同期爲負225億元人民幣）。然而，2024年第三季度公司的淨經營現金流約爲負23.3億元人民幣（去年同期爲負79.6億元人民幣），表明淨流出顯著減少。我們認爲這可能是由於公司改善了賬款收回管理。
Trends to watch
需要注意的趨勢
Total value of new contracts declined, but overseas growth was strong. The value of MCC's new contracts fell 9.2% YoY to Rmb891.7bn over 9M24, and fell 18% YoY to Rmb213.9bn in 3Q24. We attribute the decline in new contract value to falling demand, tight funding along the value chain, and possibly the firm's efforts to strengthen management of new contracts and improve the quality of new contracts. Over 9M24, the total value of new overseas contracts rose 85.2% YoY to Rmb60.8bn. We expect the firm's overseas business to maintain rapid growth.
新增合同總價值下降，但境外增長強勁。中冶的新合同價值2024年前9個月同比下降9.2%至891.7億元人民幣，2024年第三季度同比下降18%至213.9億元人民幣。我們將新合同價值下降歸因於需求下降、價值鏈上資金緊張以及可能是公司努力加強新合同管理和提高新合同質量。2024年前9個月，境外新增合同總價值同比增長85.2%至608億元人民幣。我們預計公司的境外業務將保持快速增長。
Financials and valuation
財務和估值。
Due to lower revenue and gross margin assumptions, we cut our 2024e and 2025e attributable net profit forecast by 20% and 20% to Rmb7.44bn and Rmb8.24bn. The firm's A-shares are trading at 9.1x 2024e and 8.2x 2025e P/E, and the H-shares at 4.2x 2024e and 3.6x 2025e P/E. We maintain OUTPERFORM ratings for both A-shares and H-shares.
由於營業收入和毛利率假設較低，我們將2024年和2025年的歸屬淨利潤預測分別下調了20%至人民幣7.44億和人民幣8.24億。該公司A股的2024年和2025年市盈率分別爲9.1倍和8.2倍，H股分別爲4.2倍和3.6倍。我們維持A股和H股的OUTPERFORM評級。
However, we cut our A-share TP 15.2% to Rmb3.9 (10.9x 2024e and 9.8x 2025e P/E; 19% upside). We cut our H-share TP only 6.1% to HK$2.0 (5.1x 2024e and 4.4x 2025e P/E; 21% upside), as the H-shares' P/B is only 0.3x, offering a margin of safety.
然而，我們將A股目標價下調了15.2%至人民幣3.9（2024年和2025年市盈率分別爲10.9倍和9.8倍；上漲19%）。我們僅將H股目標價下調了6.1%至港元2.0（2024年和2025年市盈率爲5.1倍和4.4倍；上漲21%），因爲H股的市淨率僅爲0.3倍，提供了安全邊際。
Risks
風險
Project progress disappoints; impairment pressure worse than expected.
項目進展令人失望；減值壓力比預期更嚴重。
譯文內容由第三人軟體翻譯。
