20200923-兴业证券-中国建筑-601668.SH-Q2_Sees_20__Growth_in_Revenue,_Cash_Flow_Continues_to_Improve_4页_649kb

报告摘要

Summary of China State Construction Engineering Corporation (601668.SH) Report

Core Content

This report provides an analysis of China State Construction Engineering Corporation (601668.SH), one of China's leading construction and civil engineering groups. It outlines the company's financial performance in the first half of 2020, forecasts for 2020–2022, and investment ratings from analysts MENG Jie and WANG Pianpian.

Financial Performance in H1 2020

Revenue: Reached CNY 728.188 billion in H1 2020, up 6.24% year-on-year.
New Contracts: Accumulated new contract signings amounted to CNY 1.3294 trillion, up 6.2% YoY.
Quarterly Trends:
- Q1 2020: Revenue declined 11.34% YoY.
- Q2 2020: Revenue rose 19.73% YoY, driven by recovery in building construction and growth in infrastructure orders.
Gross Margin: Increased to 10.96% in H1 2020, up 0.83 percentage points from the previous year.
Net Profit Margin: Declined slightly to 4.52%, down 0.17 percentage points from the previous year.
Net Profit: CNY 41,881 million in 2019A, projected to rise to CNY 46,945 million in 2020E, CNY 52,097 million in 2021E, and CNY 57,482 million in 2022E.
EPS: Estimated at CNY 1.07 in 2020E, CNY 1.19 in 2021E, and CNY 1.32 in 2022E.
OCFPS: Increased from -0.82 in 2019A to CNY 0.67 in 2020E, CNY 2.12 in 2021E, and CNY 2.15 in 2022E.
Cash Flow: Net operating cash flow per share was CNY -1.69 in H1 2020, but showed year-on-year improvement, with a loss of CNY 2.17 in Q120 and CNY 0.49 in Q220.

Sector Breakdown

Building Construction:
- Q1 2020: 8.9% YoY decline.
- Q2 2020: 13% YoY increase.
Infrastructure Construction:
- April 2020: 34.9% YoY increase.
- May 2020: 31.7% YoY increase.
- June 2020: 22.7% YoY increase.
Real Estate Business:
- YoY increase of 12.4%.
Design and Other Businesses:
- YoY decrease of 20.3% and 7.6%, respectively.

Key Financial Ratios

Ratio	2019A	2020E	2021E	2022E
Revenue Growth Rate	18.4%	14.3%	12.3%	11.0%
Net Profit Growth Rate	9.5%	12.1%	11.0%	10.3%
Gross Margin Rate	11.1%	11.2%	10.9%	10.8%
Net Profit Margin	2.9%	2.9%	2.9%	2.8%
ROE	15.1%	14.6%	14.0%	13.4%
PE Ratio (x)	5.4	4.8	4.3	3.9
PB Ratio (x)	0.8	0.7	0.6	0.5

Investment Rating

Company Rating: Outperform.
Industry Rating: Overweight.

Potential Risks

Macroeconomic downturn.
Less-than-expected infrastructure investment.
Lower-than-anticipated real estate sales.
Delayed order deliveries.
Slower overseas business expansion.

Key Information

Market Cap (CNY/Mn): 214,021.86 in 2020.
Market Float (CNY/Mn): 210,393.37 in 2020.
Net Assets (CNY/Mn): 267,774.92 in 2020.
Total Assets (CNY/Mn): 2,175,448.10 in 2020.
BVPS: 6.38 in 2020.
Share Capital: 41,976 million.
Total Shares Outstanding: 41,253.60 million.
Closing Price (Aug. 27, 2020): CNY 5.10.
Annual Production Capacity:
- Steel Structure: 1.2 million tons.
- PC (Pre-cast Concrete): 4 million tons.

Conclusion

China State Construction Engineering Corporation demonstrated resilience in H1 2020, with revenue growth and improved cash flow. The company's performance in infrastructure construction was particularly strong, contributing significantly to its overall growth. Despite a decline in design and other businesses, the firm maintained a competitive edge in policy-backed sectors such as intelligent construction and green buildings. Analysts recommend Outperform, citing strong future growth potential and favorable valuation ratios. However, macroeconomic risks and challenges in overseas expansion remain key concerns.

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