Daily BriefsIndustrials

Daily Brief Industrials: China Communications Construction, Hub Group Inc Cl A and more

In today’s briefing:

  • China Comm Const (1800 HK): 4Q22 Looks to Be a Period of Acceleration
  • Hub Group, Inc. (HUBG):  Sell Short

China Comm Const (1800 HK): 4Q22 Looks to Be a Period of Acceleration

By Osbert Tang, CFA

  • Apparently, China Communications Construction (1800 HK) has an uninspiring 3Q22, but this is mainly due to losses at concession projects and heavy credit and asset impairments.
  • We estimate outstanding backlog at Rmb3.28trn, enough to cover 4.5x FY22F revenue. Expansion in 3Q22 gross margin, against declines in 1Q22 and 2Q22, is a positive development.
  • Despite outperformance against major indexes YTD, CCCC still trades on 2.3x and 2.1x PERs for FY22-23. Its 0.16x P/B has overly discounted the value of underlying assets.

Hub Group, Inc. (HUBG):  Sell Short

By Eric Fernandez, CFA

  • The company is overearning due to an unusual confluence of events that increased demand for and limited supply of transportation, especially intermodal, services.  
  • HUB’s sales and margins surged on a 40%+ intermodal pricing increase.  EBITDA margins increased 400bps
  • Import volumes and port congestion are falling.  Pricing is easing.  Transportation could end up in a glut quickly.   The weakening macro picture could take additional pressure off transportation demand.    

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars