China State Construction International (3311) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 11.5% to HK$113.734bn and profit attributable to owners increased 15.2% to HK$9.164bn.

• ROE reached 15.3%, exceeding the 2025 target ahead of schedule; mainland operating cash flow turned positive for the first time.

• New contracts rose 17.0% to HK$188.018bn; projects in progress were valued at HK$571.944bn, including HK$350.051bn backlog.

• Net operating cash inflow was HK$501m; net gearing was 66.1%, down 3.3 percentage points YoY.

Financial highlights

• Gross profit rose to HK$16.339bn from HK$14.019bn; gross margin expanded to 14.4% from 13.7%.

• Profit for the year was HK$9.713bn versus HK$8.469bn; profit before tax reached HK$12.104bn versus HK$10.779bn.

• Operating profit was HK$14.986bn; basic EPS increased 15.2% to HK$1.819.

• Finance costs rose to HK$3.204bn from HK$2.991bn; income tax expense was HK$2.391bn versus HK$2.309bn.

Outlook and guidance

• 2024 targets: double-digit net profit growth, at least HK$210bn in new orders, and a payout ratio of ~30%.

• 2025 priorities include raising ROE, keeping net operating cash flow positive, and reaching a 50% technology-driven share of new orders.

• Priorities include selecting higher-quality mainland projects, balancing funding, and expanding Hong Kong and Macau work in hospitals, public housing, environmental facilities, and urban development.

• Continued focus on technology, digital transformation and construction industrialization; management expected continued recovery in Hong Kong and Macau.