We reiterate "Buy" rating but lower the TP to HK$15.00. We forecast China State Construction International’s (CSCI, the "Company") EPS for 2023-2025 to be HK$1.814/ HK$2.100/ HK$2.339, with YoY increase of 14.8%/ 15.7%/ 11.4%, respectively, corresponding to an EPS CAGR for 2022-2025 of 14.0%. We lower the TP to HK$15.00, equivalent to 7.3x/ 6.6x/ 6.2x 2023/ 2024/ 2025 EV/EBITDA.
　　1H2023 revenue increased 2.4% YoY to HK$55.1 billion. Shareholders’ net profit increased 15.1% YoY to HK$4.8 billion. Results were in line.Gross margin increased 2.2 ppts YoY to 15.7%, thanks to the increase in gross margins for Macau market and CSC Development. New contracts received increased 7.0% YoY to HK$96.8 billion. As at 30 June, 2023, backlog increased 16.2% YoY to HK$331.3 billion.
　　The Company's extensive experience and investment in R&D have led to significant advancements in construction industrialization and informatization. Although per unit construction cost of the MIC method is still higher than that of traditional method, with expected technological improvements and production scale expansion in the coming years, the MIC method’s cost will likely equalize or even lower than that of traditional method, driving a surge in demand for the MIC method. As China's largest MIC solutions provider, the Company stands to make substantial gains from this trend.
　　Catalysts: 1) Multiple development plans such as the Northern Metropolis and Lantau Tomorrow are clearer in Hong Kong; 2) adoption of prefabricated buildings and promotion of integrated modular building components are accelerating in 1-tier cities in China.
　　Risk: Government infrastructure spending may be lower than expected.