In addition, Hong Kong needs to increase its infrastructure and housing development.
Although the international scale of CSCEC is relatively small, the flexibility of project undertaking has increased, and the overall gross profit margin is stable at 15%, higher than that of general construction companies.
In addition, CSCEC International has gradually replaced PPP projects with short-term government targeted buyback projects (GTR) to speed up the overall cash withdrawal.
We gave CSCEC International (3311.
In the next five years, the overall supply of public housing will increase by 50% to 158000.
HK) and CSCEC Xingye (830.
The company’s goal reflects a compound growth rate of about 36% in 2021-25.
CSCEC International is a construction company under CSCEC Group, a central enterprise, with business areas in mainland China, Hong Kong and Macao.
The latest Hong Kong Policy Address pointed out that in the next five years, more than 30000 “simple public housing” would have been built for transit, so as to shorten the waiting time of the public.
The newly developed BIPV green photovoltaic building blocks of Xingye are believed to be the source of long-term growth driven by China’s dual carbon goals in the future.
Cash flow is improving.
Demand for infrastructure and housing construction rose.
First “buy” rating of CSCEC International and CSCEC Industrial.
This is the first coverage report of CSCEC International (3311.
The cash flow of the project can be corrected in two years on average, which is significantly shorter than that of previous PPP projects in 9-10 years.
The following is a summary of the construction companies with high profitability.
On the whole, driven by the stable economy, the short-term growth of the construction sector is relatively good.
In the first nine months of this year, the national fixed investment increased by 5.9% year on year, of which the infrastructure investment increased by 8.6%, maintaining a high level, and continuing to accelerate.
The growth of CSCEC Industrial Group remained at a high level.
Risk tips: impact of epidemic situation in various regions and fluctuation of infrastructure investment cycle Analyst: Huang Zhuowei.
HK) a target price of HK $11 per share, with a target valuation of 6 times the 2023 P/E ratio, equivalent to the five-year average.
New simple public housing will be built in a standard simple design and MiC way.
First buy rating.
In terms of income distribution, the income contribution of the mainland business is the largest, accounting for about half of the total income; Hong Kong is the second largest source of income, accounting for about one third of total income on average.
CSCEC International acquired the curtain wall engineering company Far East Global in 2012, and later renamed CSCEC Xingye, becoming a platform for the group’s exclusive curtain wall and building exterior wall solutions.
We estimate that the operational cash flow will return to positive in 2022, and will continue to improve steadily in the next few years.
At the same time, China Construction Industrial (830.
It is also expected to accelerate the construction of land and housing, and promote various infrastructure projects for people’s livelihood.
HK) recently released by Essence International.
The issuance and use of local special bonds continued to speed up.
With the emphasis on environmental protection in Hong Kong and the mainland, and the pressure on housing and infrastructure, the demand for short-term projects is rising, which will help CSCEC’s development.
In addition to large construction projects such as the Northern Metropolis, it is estimated that the government will spend more than 100 billion yuan on capital projects every year in the coming years, and the total value of the construction industry will increase to about 300 billion yuan every year.
The quota was basically issued this year, and the quota for special bonds approved in advance next year is expected to be issued before the end of this year.
HK) was given a target price of HK $2.5 per share, and the target valuation was 10 times the 2023 P/E ratio, equivalent to the average level of living for five years.
Investors should pay attention to it.
CSCEC’s MiC construction technology is also maturing.
Societe Generale has an absolute leadership position in Hong Kong, accounting for about 25% in Hong Kong.
Consistent with the Group’s development strategy, the current market is mainly Chinese mainland, Hong Kong and Macao markets, and overseas projects are gradually fading out.
After joining CSCEC International, Xingye’s revenue has grown by leaps and bounds, and the growth rate in recent years is also at a relatively high level, rising from about 2.65 billion yuan in 2016 (Hong Kong dollars, the same below, unless otherwise specified) to about 6.29 billion yuan in 2021, with a compound annual growth rate of about 18.9%, which is higher than the average growth level of the industry.
The promotion of the project in the next two years is more secure.
Industrial now has three business segments, namely curtain wall engineering, general contracting engineering and operation management, accounting for 71%, 13% and 16% of the revenue in 2021.
In the first half of 2022, the contract amount driven by MiC technology auxiliary energy accounted for 43.6% of the total, up 18.1 percent year on year, and the proportion will be further increased in the future.
