1–3Q26 results miss our expectations

Jinggong Steel Building announced its 1–3Q26 results:

Revenue rose 2.54% YoY to Rmb14.93bn, while net profit attributable to shareholders fell 19.07% YoY to Rmb477mn. In 3Q26, revenue rose 13.22% YoY to Rmb5.26bn, attributable net profit fell 54.42% YoY to Rmb109mn, and recurring attributable net profit declined 25.21% YoY to Rmb142mn. The firm’s 1– 3Q26 results missed our expectations due to a sharper-thanexpected decline in GM in the domestic business.

Non-recurring losses and lower GM in the domestic public building business weighed on 3Q26 earnings. In 3Q26, the firm’s GM fell 2.2ppt YoY to 11.3%, mainly due to lower GM in its domestic public building business. Net non-recurring losses totaled Rmb33mn, including Rmb40mn in fair-value losses on financial assets, mainly reflecting a decline in the value of wealth management products.

Overseas orders under pressure YoY. In 1–3Q26, the value of the firm’s newly signed contracts rose 1.5% YoY to Rmb18.25bn, while overseas orders fell 10.5% YoY to Rmb4.47bn. Bidding for some overseas projects was delayed by external disruptions. However, customer demand remained strong, and the firm maintained a sizable order backlog and a solid pipeline of key projects.

Expense control and cash flow need to improve. In 3Q26, the firm’s combined selling, G&A, R&D, and financial expense ratio rose 0.6ppt YoY to 8.6%. Operating cash flow turned negative, with a net outflow of Rmb13mn, mainly reflecting lower cash receipts from sales of goods and provision of services amid slower payment collection for overseas projects and increased use of commercial bills to settle domestic transactions, which led to higher bills receivable.

Trends to watch

We are upbeat on the expansion of the firm’s overseas business, which we expect to become a major growth driver. Overseas projects offer relatively strong profitability and favorable payment collection terms. The firm remains committed to expanding its overseas presence, and we expect a growing revenue contribution from its high-margin overseas business to further improve its overall GM.

Financials and valuation

Given pressure on GM from intensifying competition in the domestic market, we cut our 2026 and 2027 attributable net profit forecasts by 6.2% and 6.5% to Rmb614mn and Rmb658mn. The stock is trading at 10.2x 2026e and 9.5x 2027e P/E. We maintain our OUTPERFORM rating but lower our target price by 10% to Rmb4.50 to reflect changes in market liquidity and risk appetite. Our target price implies 14.6x 2026e and 13.6x 2027e P/E and offers 43.3% upside.

Risks

Slowing growth of overseas orders; disappointing execution of orders on hand; intensifying market competition.