In 2024, the net profit attributable to the parent company increased slightly year-on-year, and the growth rate of overseas business was considerable, and the company achieved revenue of 32.644 billion yuan in 2024, a year-on-year increase of -11.98%; the net profit attributable to the parent company was 3.495 billion yuan, a year-on-year increase of +0.50%; The net profit deducted from non-attributable to the parent company was 3.268 billion yuan, a year-on-year increase of +0.07%. In 2024, the company's revenue level will decline, mainly due to the optimization of the company's business structure, accelerating the liquidation and withdrawal from the municipal engineering general contracting business, and the comprehensive revenue level will be under pressure.

In terms of business, in 2024, the railway field will achieve revenue of 18.890 billion yuan, a year-on-year increase of -1.86%, the urban rail field will achieve a revenue of 8.220 billion yuan, a year-on-year increase of -3.58%, the overseas business will achieve a revenue of 2.441 billion yuan, a year-on-year increase of +64.20%, and the general contracting of engineering will achieve a revenue of 2.689 billion yuan, a year-on-year increase of -64.96%. The company's revenue structure has been adjusted significantly, the overseas business has accelerated its expansion layout, and the general contracting business has accelerated its liquidation and withdrawal.

In terms of domestic and overseas revenue, overseas regions achieved revenue of 2.441 billion yuan, a year-on-year increase of +64.20%, becoming a new growth point of revenue. The domestic revenue was 30.032 billion yuan, a year-on-year increase of -15.44%.

In 2024Q4, the company achieved revenue of 11.659 billion yuan, a year-on-year increase of -5.79%; net profit attributable to the parent company was 1.136 billion yuan, a year-on-year increase of +24.68%; net profit after deducting non-attributable to the parent company was 995 million yuan, a year-on-year increase of +22.84%.



In 2024, the company's gross profit margin will be 29.22%, +3.46pct year-on-year, and the gross profit margin in 2024Q4 will be 27.70%, +1.11pct year-on-year and -3.90pct quarter-on-quarter. The increase in gross profit margin was mainly due to the accelerated liquidation of the low-margin engineering business, and the company's continuous promotion of cost reduction and efficiency increase. In terms of business, the gross profit margin of railway field/urban rail field/overseas business/engineering general contracting business was 29.95%/33.47%/24.61%/11.98% respectively, a year-on-year increase of -1.72pct/+6.64pct/+6.10pct/+1.87pct; At home and abroad, the overseas/domestic gross profit margin was 24.61%/29.59% respectively, +6.10pct/+3.67pct year-on-year, both of which improved.

In 2024, the company's sales net profit margin will be 12.53%, +1.68pct year-on-year, and the single-quarter sales net profit margin in 2024Q4 will be 11.55%, +2.95pct year-on-year and -1.60pct quarter-on-quarter.

In 2024, the company's expense ratio for the period was 15.06%, +2.14pct year-on-year, and the selling/administrative/financial/R&D expense ratio was 2.61%/7.32%/-0.72%/5.86%, +0.20pct/+1.02pct/+0.09pct/+0.84pct year-on-year. The company's administrative expense ratio has increased, mainly due to the increase in labor costs. In addition, the company continued to strengthen scientific and technological innovation, increased R&D investment, and increased the R&D expense rate.

High increase in contract liabilities and improvement in net cash flow from operating activities

As of the end of 2024, the company's contract liabilities were 10.261 billion yuan, a year-on-year increase of +31.12%, indicating that there are abundant orders in hand. In 2024, the company's net cash flow from operating activities will be 5.236 billion yuan, a year-on-year increase of +154.42%, and the company's collection will accelerate and the cash flow will improve.

Accelerate the exit from the engineering businessFocus on the main business, and create a new growth curve for overseas business (1) Accelerate the exit from the general contracting business: In 2024, the revenue of the company's engineering general contracting business will be -65% year-on-year, and the cumulative number of new orders signed will be -73% year-on-year. The company has accelerated its exit from the low-gross profit engineering contracting business, and is expected to further focus on its main business and travel lightly; (2) Overseas business to create a new growth pole: In 2024, the company's overseas business revenue will be +64% year-on-year, and the gross profit margin will be +6pct year-on-year, achieving both volume and profit. From January to February 2025, the company won the bid for the urban rail signaling system project in Algiers and Australia, accelerating the expansion of overseas markets and bringing new growth momentum.

Profit Forecast and Investment Rating: Considering the transformation of the company's business structure, we lower the company's 2025-2026 net profit attributable to the parent company forecast to 39.05 (original value 39.92)/43.05 (original value 4.462) yuan, and the net profit attributable to the parent company in 2027 is expected to be 4.717 billion yuan. The corresponding PE of the current market capitalization is 15/14/13 times respectively, considering that the company's overseas business is progressing smoothly, and the company's "buy" rating is maintained.

Risk warning: the demand for signal system transformation is less than expected, the expansion of overseas markets is less than expected, and macroeconomic risks.