Event: The company released its 2024 annual report. In 2024, the company will achieve revenue of 32.644 billion yuan, a year-on-year increase of -11.98%, and a net profit attributable to the parent company of 3.495 billion yuan, a year-on-year increase of +0.50%; The cumulative number of new contracts signed was 50.069 billion yuan, a year-on-year decrease of 31.53%. As of the end of 2024, the company has 122.89 billion yuan of orders in hand.

The structure continued to be optimized, and the overseas business maintained high growth. In 2024, (1) railway: revenue was 18.990 billion yuan, -1.86% year-on-year, gross profit margin was 29.95%, -1.72pct year-on-year, and new orders were 25.637 billion yuan, +2.09% year-on-year. (2) Urban rail: revenue of 8.220 billion yuan, -3.58% year-on-year, gross profit margin of 33.47%, +6.64pct year-on-year; The newly signed orders were 10.006 billion yuan, a year-on-year increase of -24.09%. (3) Overseas: revenue was 2.441 billion yuan, +64.20% year-on-year, gross profit margin was 24.61%, +6.10pct year-on-year; The newly signed orders were 5.919 billion yuan, a year-on-year increase of +58.27%. (4) EPC: revenue of 2.689 billion yuan, -64.96% year-on-year, gross profit margin of 11.98%, +1.87pct year-on-year; EPC and other newly signed orders were 8.508 billion yuan, a year-on-year increase of -72.63%. (5) Others: revenue was 232 million yuan, +247.78% year-on-year, gross profit margin was 67.14%, -1.22pct year-on-year.

Profitability is improving, and R&D is increased to maintain competitiveness. In 2024, the company's gross margin/net profit margin will be 29.22%/12.53%, +3.46/+1.68pct year-on-year; The expense ratio for the period was 15.06%, +2.14pct year-on-year, of which the sales/management/finance/R&D expense ratio was 2.61%/7.32%/-0.72%/+5.86%, +0.20/+1.03/+0.09/+0.83pct year-on-year.

Inventories and contractual liabilities maintained good growth, confirming that orders in hand were good. As of the end of 2024, the company's inventory/contract liabilities were 34.54/10.261 billion yuan, +7.73%/31.12% year-on-year.

Seize the opportunity of the industry's rebound and develop "rail + low altitude" in a coordinated manner. In 2025, the company will seize the good opportunity of the rebound of railway investment and the stabilization and recovery of the urban rail market, accelerate the optimization of business structure, actively deploy overseas business and low-altitude business, accelerate the withdrawal from municipal housing construction, focus on the two main tracks of "rail transit + low-altitude economy", and continuously explore new economic growth points.

Earnings forecasts and valuations. We expect the company to achieve operating income of 324.12/343.06/36.958 billion yuan in 2025/2026/2027, a year-on-year increase of -0.71%/+5.85%/+7.73%; The net profit attributable to the parent company was 36.07/39.46/4.348 billion yuan, a year-on-year increase of +3.22%/+9.38%/+10.19%. Referring to comparable companies, we give the company a PE valuation of 18-21 times in 2025, a reasonable value range of 6.13-7.15 yuan/share (the company's EPS is expected to be 0.34 yuan in 2025), and a reasonable market value range of 64.9-75.8 billion yuan, giving an "outperform" rating.

Risk Warning. slowdown in the company's business progress; industry investment is less than expected; intensified competition and other issues.

Compliance Reminder: The company acts as a market maker of [688009 China General Account], and investors are reminded to pay attention to the potential conflict of interest risk in the release of the securities research report.