20180525-兴业金融证券-中国建筑国际-03311.HK-Reverse_Roadshow_Takeaways_8页_398kb

报告摘要

China State Construction (CSCI) Summary

Core Content

China State Construction (CSCI) is a leading construction and engineering company based in mainland China, Hong Kong, and Macau, with a strong presence in the construction market. The report outlines the company's performance, market position, and investment outlook as of May 2018.

Key Projects and Macau Business

MGM Cotai: A newly completed project, started in mid-2014 and opened in February 2018. It has a GFA of 4.46 million square meters and is the first overseas project worth HKD10bn.
Light Rail Upper Cover Project: Currently under construction, showing CSCI's strong construction capabilities. The project is ahead of schedule, with CSCI completing 90% of the work under a 60% contract.
Nova II: The largest commercial housing complex in Macau. CSCI and Shun Tak Holding have invested 30% and 70% respectively in the project.
Theme Park: One of CSCI's major projects in Macau, indicating the company's diverse portfolio in the region.

Macau Earnings Contribution

The Nova project is expected to significantly contribute to Macau's earnings, potentially generating around HKD800m in net profit annually for the next three years.
In 2017, Macau's net profit contribution was approximately CNY800m, accounting for 14% of CSCI's total earnings.
The Macau business is anticipated to be a key earnings driver for CSCI over the next three years.

Macau Market Potential

The potential business in Macau over the next 5-10 years is estimated at HKD160bn.
This includes HKD70bn of government projects, HKD50bn of casino-related projects, and HKD40bn of other projects.
Incremental revenue from Macau is expected to be at least c.HKD5bn annually.

Financial Overview

Recurring Net Profit: Expected to grow from HKD4,486m in Dec-16 to HKD8,914m in Dec-20F.
Recurring EPS: Projected to increase from HKD1.05 in Dec-16 to HKD1.93 in Dec-20F.
Dividend Yield: Is expected to rise from 3.2% in Dec-16 to 5.5% in Dec-20F.
P/E Ratio: Based on FY18F recurring P/E of 10x or -0.5SD below 5-year forward mean, the target price (TP) is set at HKD13.20, which is above the Bloomberg consensus peer average of 8x.
P/B Ratio: Declines from 1.64 in Dec-16 to 0.82 in Dec-20F.
Net Debt to Equity: Rises from 37.7% in Dec-16 to 31.8% in Dec-20F, showing a trend of improved financial leverage.
Interest Cover: Increases from 7.28x in Dec-16 to 7.42x in Dec-20F, indicating better financial health.

Investment Recommendation

Maintain Buy: Based on the TP of HKD13.20, which provides a 36% upside from the current price of HKD9.74.
Key Drivers: Strong backlog and improving share of PPP projects.
Key Risks: Political risks in the Hong Kong market and potential underperformance of the Chinese PPP market.

Share Data

Market Cap: USD6,265m.
Avg Daily Turnover: 68.1m HKD or 8.67m USD.
52-wk Price Range: 9.54 - 13.7 HKD.
Free Float: 29%.
Shares Outstanding: 4,488 million.
Estimated Return: 36%.

Shareholders

China Overseas Holdings: Owns 63.0% of the shares.

SWOT Analysis

Strengths: Leading player in HK/Macau's construction sector.
Weaknesses: Weaker-than-expected infrastructure spending in China.
Opportunities: Potential business in Macau over the next 5-10 years.
Threats: Margin pressure due to a shift towards more PPP projects and political risks.

Valuation Metrics

Recurring P/E: Expected to decrease from 9.32x in Dec-16 to 5.05x in Dec-20F.
P/B: Expected to decrease from 1.64x in Dec-16 to 0.82x in Dec-20F.
EV/EBITDA: Expected to decrease from 6.83x in Dec-16 to 3.88x in Dec-20F.
ROE: Expected to decrease from 20.6% in Dec-16 to 17.7% in Dec-20F.
Net Profit Margin: Expected to remain stable at around 11.4-11.9% over the period.

Investment Research Disclaimers

The report is for informational purposes only and not an offer to buy or sell.
RHB is not liable for any losses arising from reliance on this report.
Forward-looking statements are based on assumptions and subject to change.
The report contains confidential information and may not be reproduced without consent.

Distribution Restrictions

Malaysia: Issued by RHB Research Institute Sdn Bhd.
Thailand: Issued by RHB Securities (Thailand) PCL.
Indonesia: Not an offering document and should not be construed as an offer of securities.
Singapore: Only for accredited, expert, and institutional investors.
Hong Kong: Issued by RHB Securities Hong Kong Limited (CE No.: ADU220).