We reiterate "Buy" rating and maintain the TP at HK$15.00. We slightly lower the EPS forecasts for China State Construction International’s (CSCI, the "Company") for 2024/ 2025 by 3.4%/ 3.1% to HK$2.028/ HK$2.266, respectively, and initiate the EPS forecast for 2026 at HK$2.503. We maintain the TP at HK$15.00, equivalent to 7.2x/ 7.1x/ 6.9x 2024/ 2025/ 2026 EV/EBITDA.
　　2023 shareholders’ net profit increased 15.2% YoY to HK$9.2 billion, and results were in line with expectation. Total revenue increased 11.5% YoY to HK$113.7 billion in 2023, in which technology driven construction decreased 27.3% YoY to HK$22.1 billion (as anti-epidemic projects no long existed for 2023), investment driven construction increased 33.1% YoY to HK$54.0 billion, traditional construction increased 22.0% YoY to HK$36.1 billion and operation increased 11.0% YoY to HK$1.6 billion. Total new contracts increased 16.9% YoY to HK$187.9 billion, in which technology driven construction increased 44.4% YoY to HK$74.5 billion, investment driven construction increased 21.1% YoY to HK$64.6 billion, traditional construction decreased 13.8% YoY to HK$46.5 billion and operation increased 23.6% YoY to HK$2.4 billion. New contracts target is HK$210 billion in 2024.
　　In the Hong Kong and Macau markets, initiatives such as the Northern Metropolis plan and increased non-gaming investments by Macau's gaming companies are underway. In Mainland China market, the three major projects (affordable housing, urban village renovation, and "dual-use" public infrastructure for both peacetime and emergencies) bring a historic opportunity for housing construction industry. In addition, the construction industry is pivoting towards industrialization and green construction to meet labor and dual carbon objectives, with Modular Integrated Construction (MiC) products leading the way. In Beijing, the renovation of Building No. 8 Huapichang Hutong in Xicheng District showcased a rapid 90-day transformation, exemplifying efficient old community redevelopment. Meanwhile, Hong Kong's Light Public Housing (LPH) initiative is addressing immediate housing needs by adding 30,000 units.
　　Catalysts: 1) The green low-carbon intelligent construction base project in Shenzhen officially started construction; 2) the Company won the bid for the expansion project of the New Territories West Landfill in Hong Kong together with other construction companies, with a total contract value of HK$61.1 billion, the single largest project in contract value in its history.
　　Risks: 1) Government infrastructure spending may be lower than expected;
　　2) overseas project risks.