China Communications Construction 1800

[winston]

Not vested. Still on my watchlist. Risks includes higher raw materials and wages.

==============================================

BROKER CALL-China Communications to get boost from port construction- CLSA

BEIJING (XFN-ASIA) - CLSA said its confidence in the order strength of China Communications Construction Co Ltd was boosted by its meeting with management of the company's main port construction facility.

"Our visit to (northern China's) Caofeidian last week reaffirmed our view on healthy port-construction demand, for which new orders may surprise on the upside," CLSA said.

CLSA said the company's largest port construction subsidiary -- First Navigational Bureau (FNB) at Caofeidian -- is likely to see "major expansion" in bulk and specialized ports.

"FNB projects 26 pct year-on-year growth in revenue and new orders for 2008, ahead of our order-growth estimate of 23 pct for CCC's port, road/bridge and railway construction."

Trading at 15 times expected 2009 earnings, China Communications Construction stock is "attractive" CLSA said.

The note to investors has a "buy" call and a 23.5 hkd target price on the firm.

Hong Kong-listed China Communications Construction closed today at 16.94 hkd, up 0.12 pct.

[winston]

Not vested yet. From Dr. Check:-

No matter how bad markets are, infrastructure construction plans in China will continue, and a top stock pick in this context is China Communications Construction (1800).

It is China's largest port construction and design company, its leading road bridge builder and the world's largest container crane manufacturer. It is also the largest dredging company in China and the third largest in the world.

Under China's 11th Five-Year Plan, 3.8 trillion yuan (HK$4.3 trillion) was designated for transport infrastructure development, and CCC will benefit from centrally planned road, bridge, deepwater harbor, railway and subway projects.

Its profit margin was 10.3 percent in 2007. Despite higher cement and steel costs, it aims to improve on that figure by 0.8 percent this year.

CCC will perhaps participate in the reconstruction in Sichuan province and has 40 overseas orders on its books.

Trading at HK$14.80 per share or 12.5 times projected 2009 earnings, having dropped 40 percent from its peak of HK$25.40.

This was too much for UBS. It rates CCC based on a target price of HK$26.

[winston]

Not vested.

China Communications Construction (1800.HK: Quote, Profile, Research, Stock Buzz) was down 6.1 percent, after tumbling as much as 7 percent earlier, following a Citigroup downgrade on the stock to hold from buy on the recent sharp share price rally.

Shares in the mainland's top builder of highways and ports has rallied nearly 16 percent since the begining of July.

[winston]

Not vested. From UOB-Kay Hian:-

China Communications Construction’s (CCC) 43.26%-owned subsidiary, Shanghai Zhenhua Port Machinery (ZPM) (600320 CH), reported its 1H08 results.

According to the announcement, ZPM saw a 5.8% yoy decline in net profit from Rmb990m in 1H07 to Rmb932m in1H08 based on China’s accounting standard. The earnings decline was mainly due to the booking of a Rmb467m loss from a change in the fair value of foreign exchange contracts with banks. ZPM's turnover grew 14.9% yoy from Rmb9.3b in 1H07 to Rmb10.6b in 1H08. CCC's equipment manufacturing division, which mainly supplies to ZPM, accounted for 15% and 33% of turnover and operating profit in FY07.

ZPM's interim results are likely to drag down CCC's overall operating profit. We believe CCC's interim results are likely to disappoint the market. There is downside risk for CCC given the potential earnings disappointment. In addition, CCC’s upside is capped by concern over the slowdown in investments in port construction in China. CCC has less exposure to the railway construction industry. We suggest investors switch out of CCC and buy CRG.

[winston]

Not vested.

China Comm Cons tumbles after broker downgrades

HONG KONG, Sept 4 (Reuters) - Shares in China Communications Construction <1800.HK> tumbled 10 percent in Thursday early trade as analysts forecast softening investment growth in China's construction sector and on rising raw material costs.

The stock fell 9.81 percent to HK$11.22,its lowest in more than a year. Citigroup cut its rating on the stock to sell from hold with a reduced target price of HK$11.20, while Deutsche Bank downgraded the company to hold from buy, slashing its target price to HK$13.70 from HK$20.50. Both the notes were dated Sept. 3.

"Though the company still benefits from China's strong demand for railway and an expanding overseas business, its earnings growth is subject to downside risks due to raw material price hikes, dredging capacity constraint and weakening demand for container cranes," Jin Xu, analyst with Deutsche Bank wrote in report.

[winston]

Not vested.

Keep on right profit track with railway construction
Benjamin Scent

Shares of builder China Communications Construction (1800) were pummeled yesterday after a string of broker downgrades, but CCC's poor showing does not indicate a negative outlook for the whole construction sector.

Railway construction offers the best growth story, so analysts recommend investors switch out of CCC and buy into China Railway Construction Corp (1186) and China South Locomotive and Rolling Stock (Group) Corp (1766).

"Out of all the Chinese construction companies, CCC has the highest exposure to raw material price fluctuations, because of its focus on roads and machinery," Macquarie Capital analysts wrote in a trading note yesterday.

"The growth story remains on the railway side."

Shares of CCC plunged 13.7 percent to HK$10.74 yesterday in a massive sell- off. A pair trade of long China Railway Construction Corp and short CCC could offer investors a total return of 32 percent, according to Citi.

"Different from the port construction and road construction market, railway construction has just started the upcycle," Citi analyst Jenny Zhen said.

Another benefit of the railway plays, according to Macquarie, is that the government procures raw materials for railway projects, so China Railway Construction will not be hit by high input costs.

CCC is expected to report poor interim results on September 17, based on the already-announced results of two A-share-listed subsidiaries.

CLSA on Wednesday downgraded CCC to "sell," from "buy," and cut its target price to HK$9.50, indicating 12 percent further downside. Citi cut its rating to "sell," from "hold," and lowered its target price to HK$11.20.

"Despite 12-month price underperformance, we believe the upcoming interim results will trigger significant consensus downgrades," CLSA analyst Manop Sangiambut wrote in a report.

CLSA suggested investors reenter the stock at HK$7.60.

[winston]

China Comm Const H1 net down 20 pct on thinner margins, fewer extraordinaries

HONG KONG (XFN-ASIA) - China Communications Construction Co Ltd said it posted a first half to June net profit of 2.20 bln yuan, down 20 pct from 2.74 bln a year earlier, due mainly to lower profit margins and smaller extraordinary income.

The company, which specializes in port, road bridge and railway construction, booked relocation compensation of 123 mln yuan for the first half, compared with 636 mln yuan for the same period of 2007.

Stripping out the relocation compensation, net profit was 2.14 bln yuan, up 1.5 pct from 2.11 bln yuan a year earlier.

Earnings per share for the period was 0.15 yuan, compared with 0.19 yuan a year earlier, while adjusted earnings per share was unchanged at 0.14 yuan.

Revenue amounted to 75.75 mln yuan, up 29.1 pct from 58.67 bln yuan, while cost of sales increased 30.8 pct to 68.29 bln yuan.

As a result, the operating profit margin decreased to 5.5 pct from 8.2 pct.

Excluding relocation compensations, operating margin was 5.3 pct, compared with 7.1 pct for the six months ended June 2007.

The company attributed the decline in profitability to China's macroeconomic austerity measures and inflationary pressure, particularly on construction materials, energy resources and labor costs.

[winston]

1) its dominant position in the port construction market (90% market share in the port construction),
2) high exposure on the highway constrcutions (26% of total revenue), and
3) relative attractive valuation vs. CRCC and CRG

=============

China Plans $732 Billion Transport Investments, Business Says

Nov. 5 (Bloomberg) -- China plans to spend 5 trillion yuan ($732 billion) over the next three to five years on roads, ports
and other types of transport infrastructure, China Business News said, citing unidentified people.

The government previously planned to spend about 140 billion yuan annually on transport facilities up to 2010 and then 100 billion yuan a year over the following decade, the report said.

China approved a 2 trillion yuan investment in railways last month amid efforts to stimulate economic growth, the report
said.

[winston]

Stock plunges as CCCC confirms unit in US probe by Benjamin Scent

China Communications Construction Co (1800) yesterday confirmed one of its subsidiaries has been named in US court papers for allegedly bribing its way to a port contract in Bangladesh.

CCCC was one of yesterday's 10 most heavily traded stocks, falling 6.8 percent to close at HK$8.85.

In confirming yesterday's report in The Standard, CCCC said it is seeking legal advice on the affair, which the US Department of Justice said is part of a "a wide-ranging conspiracy" by several companies to bribe public officials and their family members in Bangladesh.

US government attorneys are seeking to recover US$1.76 million (HK$13.6 million) they say China Harbour Engineering paid in bribes to the son of former Bangladesh prime minister Khaleda Zia.

China Harbour was a predecessor company of CCCC and is now a fully- owned subsidiary of the Hong Kong- listed firm.

A spokesman for CCCC admitted yesterday that the firm named in the court documents is a subsidiary of CCCC. "They [CCCC] are discussing with their lawyers regarding the issue," he told The Standard.

He said the issue will not affect CCCC's business as it relates only to a subsidiary.

A spokeswoman in CCCC's investor relations department admitted that it owned China Harbour.

"Since it involves a subsidiary of CCCC, it is still under verification," she told The Standard.

BOC International analyst Jimmy Lam said the allegations would dampen CCCC's 2009 earnings by 0.1 percent.

"CCCC's reputation will be tarnished and [the case] may affect its future development in the overseas market," Lam said.

The alleged bribes, to ensure China Harbour would win a US$131 million contract to build a new container terminal at Bangladesh's Chittagong port, were squirreled away in Singapore bank accounts, US attorneys claim.

The US Department of Justice is seeking to recover the funds under US money-laundering laws.

No charges have been filed against China Harbour.

[winston]

BROKER CALL -China Comms Construction kept 'buy' with units under spotlight -DBS

BEIJING (XFN-ASIA) - DBS Vickers said it is maintaining its "buy" rating and 8.52 hkd price target on China Communications Construction (CCC) after the company's share price fell last week on news of irregularities at two of its overseas projects. In a note, DBS said the incidents are unlikely to affect CCC's ability to secure overseas contracts and that the current short-term share price weakness offers a good buying opportunity.

CCC's shares were up 3.9 pct at 7.73 hkd this morning in Hong Kong. One project was in Bangladesh, where it was reported that CCC's subsidiary China Harbour Engineering Co Ltd had offered 1.76 mln usd to some former Bangladeshi officials' family members to secure the 131 mln usd Chittagong port project. In addition, the World Bank said it had investigated seven companies alleged to have engaged in collusive practices for a road project in the Philippines.

China Road and Bridge Corp, a subsidiary of CCC, was one of the companies. "It was unfortunate that the two incidents were highlighted within a short span and CCC's share price has come under some selling pressure. We believe it should not affect CCC's credibility in securing future contracts because no official action was taken by foreign governments against the units," DBS said. "We view the short-term weakness in the share price a good buying opportunity," it added. (1 usd = 7.8 hkd) [email protected]