Morgan Stanley: Cuts the target price for CHINA STATE CON to HKD 13, management withdraws profit guidance

JP Morgan released a research report stating that China State Construction International's net profit after tax in the third quarter increased by 8.4% year-on-year, higher than the bank's expectation of a 5% year-on-year increase. However, management has withdrawn its guidance for double-digit profit growth for the full year, as well as for maintaining positive and continuously growing operating cash flow, citing macroeconomic uncertainties and the need for funding for upcoming investments; nonetheless, the strategic direction remains unchanged. Management reiterated its commitment to maintaining positive operating cash flow, with a dividend payout ratio of no less than 30%. The bank has lowered its profit forecast for 2025, now expecting an 8% year-on-year growth, implying a 15% rebound in fourth-quarter profits compared to last year's low base. For 2026 and 2027, the bank has adjusted its profit forecast to mid-single digits; the target price has been reduced from HKD 15 to HKD 13, maintaining an "Overweight" rating