1H25 results slightly beat our expectation

Jinggong Steel Building announced its 1H25 results: Revenue rose 29.48% YoY to Rmb9.91bn and net profit attributable to shareholders grew 28.06% YoY to Rmb350mn. In 2Q25, revenue rose 20.08% YoY to Rmb5.09bn and net profit attributable to shareholders grew 28.46% YoY to Rmb226mn. The 1H25 results slightly beat our expectations, possibly due to faster-than-expected overseas business expansion.

1) New orders grew steadily; overseas business expansion accelerated. In 1H25, steel structure sales volume rose 47.0% YoY to 835,000t. New orders grew 2.2% YoY to Rmb12.51bn. Domestic demand fell 14.5% YoY to Rmb8.85bn, while international orders rose 94% YoY to Rmb3.66bn, with 1H25 overseas orders already exceeding the full-year 2024 total.

2) New business expansion proved effective, with the Jinggong brand further strengthening its market position. In 1H25, the firm secured Rmb2.4bn in new business orders, representing a 10.0% YoY decrease. This figure included Rmb1.4bn in EPC and prefabricated building orders (down 35.8% YoY), Rmb80mn in BIPV orders (down 42.9% YoY), and Rmb920mn in industrial chain and strategic franchise orders (up 161.5% YoY). Notably, the industrial chain and franchise orders alone exceeded the 2024 total for chain and joint venture orders. As of end-1H25, the firm had established eight joint ventures nationwide, expanding its presence across key regional markets including Chongqing, Fujian, Hainan, and Henan.

3) Cost reduction and efficiency efforts yielded positive results. The firm continued to refine its management systems, achieving a 1.9ppt YoY decrease in its overall expense ratio to 7.4% in 1H25. Specifically, selling expenses accounted for 0.8% of revenue (down 0.3ppt YoY), G&A expenses represented 2.8% (down 0.7ppt YoY), R&D expenditure stood at 3.5% (down 0.7ppt YoY), and financial expenses declined to 0.3% (down 0.2ppt YoY).

4) Operating cash flow showed significant improvement in 1H25. The firm strengthened its receivables collection efforts, resulting in a net operating cash inflow of Rmb423mn, a 90.8% increase YoY. This enhancement in cash flow was accompanied by improved asset quality.

Trends to watch

Emerging businesses and overseas markets are positioned to become new growth drivers as the firm actively transforms its business structure. The firm is accelerating its overseas expansion, actively undertaking key global projects while serving domestic companies in their overseas expansion. In 1H25, overseas orders accounted for 29.3% of total new orders. Meanwhile, the firm continues to develop new business areas including industrial chains and joint ventures, patent licensing, and BIPV. We expect the firm’s business model to show gradual improvement over the medium to long term.

Financials and valuation

Given the rapid growth of the firm’s overseas business and its efforts to reduce costs and improve efficiency that have paid off, we raise our 2025 and 2026 earnings forecasts by 7.6% and 12.4% to Rmb587mn and Rmb656mn. The stock is trading at 12.3x and 11.0x 2025e and 2026e P/E. We maintain an OUTPERFORM rating and raise our target price 15.9% to Rmb4.15, implying 14.3x 2025e and 12.7x 2026e P/E and offering 14% upside.

Risks

Disappointing project payment collection and/or order execution.