Matthew Kwok: CHINA COMM CONS (01800) Buy:$7.80 Target:$8.50 Stop:$7.50 - AASTOCKS.com

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Matthew Kwok: CHINA COMM CONS (01800) Buy:$7.80 Target:$8.50 Stop:$7.50

2012-02-09 09:46:14

Matthew Kwok, Vice President (China Division) of Haitong International Securities Group Limited, said the A-share issuing proposal by CHINA COMM CONS (01800) has been approved by China Securities Regulatory Commission (CSRC) and up to 1.6 billion A-shares will be issued to raise RMB5 billion in maximum. This proceeds will be used for the purchase of the dredging ships, engineering ships and machinery and equipment and investment in BOT project of transportation infrastructure facilities construction. Benefited from the booming cycle from the infrastructure in the Mainland and overseas engineering business, the company maintained a rapid growth in the past three years. The company's net profit margin and return on assets in recent years has been higher than the domestic peers, mainly because the investment projects accounted for a high proportion of the main business and the contribution of investment income is higher than its peers. The company also has accumulated more experience in the project investment operations. As the company increases the proportion of investment projects in the main business, the proportion of investment income in the future will be higher. According to the A-share prospectus, the forecast 2011 profit is 11.369 billion yuan, an increase of about 20% year-on-year. It is estimated that the diluted earnings per share in 2011 to 2013 will grow approximately 15%, the stock price shows compelling valuation in view of the 2012 forecast P/E of about 8 times. (r)

(By an SFC licensed person, who does not hold the above-mentioned stock, to provide advice on securities.)

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